(navigation image)
Home American Libraries | Canadian Libraries | Universal Library | Community Texts | Project Gutenberg | Children's Library | Biodiversity Heritage Library | Additional Collections
Search: Advanced Search
Anonymous User (login or join us)
Upload
See other formats

Full text of "Handbook of state and federal employment laws for Montana public employers"

HANDBOOK OF STATE AND FEDERAL 

EMPLOYMENT LAWS FOR MONTANA 

PUBLIC EMPLOYERS 




Compiled by 

Ted J. Doney, 

Attorney at Law 



Published by 

LABOR STANDARDS DIVISION 

Montana Department of Labor and Industry 



Funded Through A Grant From 

Employment Standards Administration 

United States Department of Labor 



Digitized by the Internet Archive 

in 2012 with funding from 

Montana State Library 



http://archive.org/details/handbookofstatef06done 



HANDBOOK OF STATE AND FEDERAL 

EMPLOYMENT LAWS FOR MONTANA 

PUBLIC EMPLOYERS 



Compiled by 

Ted J. Doney, Attorney at Law 

Helena, Montana 



Published by 

LABOR STANDARDS DIVISION 

Montana Department of Labor and Industry 

Capitol Station 

Helena, Montana 59620 

(406) 444-5600 



September, 1983 



This publication of state and federal employment laws was made possible by a grant 
from the Employment Standards Administration, U.S. Department of Labor, to the Montana 
Department of Labor and Industry, Labor Standards Division. The intent of this manual is to 
provide the State of Montana and it's political subdivisions with a reference to state and 
federal laws regulating the employment of persons in the public sector. The manual is 
designed to be updated in the event of substantive revisions in state or federal law. 

The conclusions contained herein are those of the author, and are not necessarily 
concurred in by the Labor Standards Division. 



Doyle I. Love ridge 
Regional Director 
U. S. Department of Labor 
Employment Standards 

Administration 
Denver, Colorado 



David L. Hunter 
Commissioner 
Montana Department of 

Labor and Industry 
Helena, Montana 



Dick Kane 

Administrator 

Labor Standards Division 

Montana Department of 

Labor and Industry 
Helena, Montana 



Published: September, 1983 



TABLE OF CONTENTS 



PREFACE 



Public Employers Defined and Covered by Handbook ... 1 

List of Montana Public Employers — Appendix A . . . . 2 

Categories of Labor Laws 3 

Chapter Breakdown; Coverage of Handbook 4 

Federal Versus State Law 4 

Supplements to Handbook 5 

Laws, Rules, Appendices and Forms 5 



CHAPTER 1 . THE EMPLOYMENT RELATIONSHIP 



A. Generally 6 

The Employment Contract 6 

Employee and Independent Contractor Defined . . 8 

Examples of Independent Contractors 10 

Administering Agencies — Appendix B 10 

B. Obligations of Employer 10 

Occupational Health and Safety 10 

| Medical Care to Employees 11 

r Seating 11 

Liability of Employers 12 

C. Obligations of Employee 12 

Competence; Obedience; Performance 12 

Terminating Employees 12 

D. Prohibitions on Employer 13 

E. Liability of Employer 13 

Injuries to Employees 9 13 

Injuries Caused by Employees 13 

Sovereign Immunity 14 

Claims Against a Public Employer 14 

Liability Insurance 15 

Personal Liability 15 



CHAPTER 2. HIRING REQUIREMENTS 



Generally 16 

Employment Preference 18 

1. Veterans 18 

State Law 18 



Veteran Employment Preference — State 

Government, Cities, and Counties ... 1 

What Constitutes a Preference 18 

Re-employment of Veterans 1 9(J 

Federal Law 19 

2. Disabled Civilians 19 

3. Montana Labor — Public Works Contracts . . 20 

Montana Law 20 

Conflicts with Veteran Preference .... 20 

C. Child Labor 20 

State Law 20 

Federal Law 21 

D. Nepotism 22 

Nepotism Defined 22 

The Montana Nepotism Law 23 

Degree of Relationship 23 

Examples of Relatives Covered 23 

Application of the Nepotism Law 24 

Specific Situations 25 

The Human Rights Act and Nepotism 25 

Agreements Between Employers 26 

Purpose of Nepotism Law; Penalties 26 

E. Equal Employment and Discrimination 27 

F. Miscellaneous Hiring Requirements 27 

Medical Examination 27i 

Lie Detector Tests 2* 

Employment of Aliens 27 



CHAPTER 3. WAGES AND WAGE PROTECTION 



A. Generally , 30 

B. Minimum Wage Requirements 31 

1 . Federal Versus State Law 31 

The National League of Cities v . 

Usery Case 31 

Federal Interpretation 32 

Attorney General's Interpretation .... 32 

Practical Application 33 

2. State Minimum Wage Law 34 

Generally 34 

Construction of Law 34 

Effect on Employment Contracts 35 

What Constitutes Wages 36 

C. Overtime Compensation 

1 . Generally 37 

The Workweek . . . .• 3"^ 

The Overtime Rate 

What Constitutes Overtime 

ii 



* 



The Regular Rate 39 

2. Working Time 4 

Generally 40 

• Consent or Knowledge of Employer .... 41 

3. Nonproductive Time 41 

Generally 41 

Leave, Illness, Vacations and 

Holidays 42 

Attendance at Meetings and Seminars ... 42 

Meal Periods 4 2 

Rest Periods 43 

Sleeping Time 4 3 

Employees Residing at Employer's 

Premises 43 

Preparatory and Concluding 

Activities 44 

Travel Time 44 

Waiting Time 4 4 

D. Employees Covered by The Wage and Hour Law ... 45 

Generally 45 

Who Is An "Employee" 4 5 

E. Exemptions 4 6 

1. Generally 46 

Time Unit in Applying Exemption .... 47 

2. Executive, Administrative, and 

Professional Employees 47 

Generally 47 

Factors Determining Exemption 4 7 

Executives 48 

Administrators 50 

Professionals 52 

Trainees as Executives, Administrators 

and Professionals 54 

3. Agricultural Employees .... 54 

Generally 54 

Farm Worker Defined 54 

Minimum Wages of Farm Workers ...... 55 

4. Apprentices and Learners 55 

Generally 55 

Learner Defined 55 

Learner Certificate — Appendix C . . . . 56 

5. Handicapped Employees 56 

Generally 56 

Handicapped Worker Defined 56 

Handicapped Worker Certificates 57 

6. Miscellaneous Exemptions 57 

Generally 57 

Student Learner 57 

Employees of Sheriffs' Departments, 

Health Care Facilities, Municipal and 

County Governments, and Firefighters. . 57 



in 



Record Keeping Requirements Under the Wage 

and Hour Law 58 

1 . Generally 58 

2. General Requirements 59)^^ 

Form of Records 59 ^^ 

Payroll Records 59 

Payroll Records of Bona Fide Executive, 

Administrative and Professional 

Employees 60 

Preservation of Records; Inspection ... 61 
Records of Board, Lodging or Other 

Facilities 61 

Records of Learner t Apprentice, 

Student Learner and Handicapped 

Workers 61 

Prevailing Wage Requirements 62 

1. Generally 62 

2. Federal Prevailing Wage Law 62 

Davis-Bacon Act — Appendix D 63 

Prevailing Wage Determination 

Under Davis-Bacon 63 

Laborers and Mechanics Under 

Davis-Bacon 65 

Construction Projects Covered by 

Davis-Bacon 65 

Overtime Pay Requirements 66 

Effect on State and Local Governments . . 67 

3. State Prevailing Wage Law 67 i 

State "Little Davis-Bacon Act;" 

Conflicts with Federal Law 67 

Prevailing Wage Determination Under 

State Law 68 

Employees Covered by State Law 69 

Projects Covered by State Law 69 

Public Contracting Agencies Covered 

by State Law . 69 

Other Requirements 69 

Penalties for Non-compliance 70 

Other Wage Protection Laws 70 

1 . Generally 70 

2. Special Wage Level Laws 71 

3. Wage Protection of Restaurant 

Employees 

Generally . . . . r . 

Bonding Requirements 71 

4. Contractor's Bond 72 

5. Wage Payment ........ 

Payment of Wages Generally 

Deductions ..... 73 

Payment When Employee Terminated .... 73 

Enforcement 73 

Payment to State Employees 74 



IV 



i> 



CHAPTER 4. HOURS OF EMPLOYMENT 



A. Generally 75 

B. A Day's Work 7 5 

1. Montana Constitution 75 

The 8-Hour Day — Generally 75 

Interpretation 76 

2. State Statutes 77 

The 8-Hour Day — Public Employees .... 77 

Restaurant Employees 78 

Telephone Operators 78 

C. The Workweek 78 

Overtime Compensation 78 

Firefighters 78 

Restaurant Employees 79 

D. Effect on Employment 79 

CHAPTER 5. EMPLOYEE RIGHTS AND BENEFITS 

A. Generally 83 

B. Leave 83 

1 . Sick Leave 83 

Generally 83 

Employees Covered 83 

Sick Leave Defined 84 

Sick Leave Credits 84 

Part-time, Temporary and Seasonal 

Employees 85 

Payment for Termination; Transfer .... 85 

Abuse of Sick Leave 86 

Charging Sickness to Annual Leave .... 86 
Employer Personnel Sick Leave Policies; 

Employment Agreements 86 

2. Annual Leave 87 

Generally 87 

Employees Covered 87 

Annual Leave Credits 87 

Part-time , Temporary and Seasonal 

Employees 88 

Payout for Termination; Transfer 88 

Determination of Annual Leave Dates ... 89 
Personnel Policies and Employment 

Agreements 89 

3. Holidays 89 

Generally 89 

Holidays for Public Employees Other 

Than School Employees 89 

Holidays for School Employees 91 



Work During Holidays 91 

Holidays Falling During Annual Leave ... 91 

4. Military Leave 92 ( 

Leave of Absence of Public Employees 

Attending Training Camp 92 

Military Leave While on Active Duty — 

Annual Leave Credits 92 

5. Maternity Leave 93 

Generally 93 

Unlawful Acts of Employer 93 

Leave of Absence 93 

Reinstatement 94 

Enforcement 94 

6. Jury and Witness Duty 94 

7. Employees Elected or Appointed to Public 

Office 95 

C. Group Insurance Coverage 95 

Generally 9 5 

Group Insurance for Public Employees 95 

State Employees 96 

Contributions 96 

Individual Employee Coverage 96 

D. Workers' Compensation Insurance 96 

Generally 96 

State Agencies 97 

Local Governments and Political 

Subdivisions 97 

Other Obligations of Employer 98 

E. Unemployment Insurance 98 

Generally 98 

Contributions 99 

Benefits 99 

Other Employer Obligations 99 

F. Retirement Systems 99 

Generally 99 

Systems in Effect; Members 100 

PERS — State Employees Covered 101 

PERS — Local Government and Political 

Subdivision Employees 102 

Contributions 103 

G. Social Security and Income Tax Withholding .... 103 

1. Social Security 103 

Generally 103 

2. Income Tax Withholding 103 

Generally ..... 103 

H. Employee Retirement Income Security Act of 

1974 (ERISA) * . 104 

Generally 104 

vi 



Effect of ERISA 105 

Occupational Health and Safety 106 

Generally 106 

Health and Safety Standards 107 

Enforcement 108 

Collective Bargaining 108 

Generally 108 

Organization of Public Employees 1 09 

Bargaining 109 

Collective Bargaining Agreements 109 

Unfair Labor Practices 110 

Political Activity 111 

1. Generally 111 

2. Federal Law 111 

Employees Covered 111 

Prohibited and Permitted Activities ... 112 

3. State Law 112 

Employees Covered . 112 

Prohibited and Permitted Activities ... 113 

Personnel Policies and Procedures . 114 

1. Generally 114 

Authority to Adopt Personnel Policies . . 114 
Personnel Powers and Policies of the 

State Department of Administration ... 115 
Effect of Personnel Policies; Recent 

Court Decisions 117 

2. Grievance Procedures 119 

Generally 119 

Grievances of State Employees 119 

Grievances of Local Government 

Employees ..... 120 

Grievance Procedures in Collective 

Bargaining Agreements 120 

Court Review of Administrative 

Grievance Procedure Decisions 121 



CHAPTER 6. DISCRIMINATION IN EMPLOYMENT 



Federal and State Laws 122 

1. Generally . 122 

2. Federal Laws 123 

Generally 123 

Federal Constitution 123 

Civil Rights Act of 1964 123 

Presidential Executive Orders 124 

Equal Pay Act 124 

Discrimination in Employment Acts .... 125 

3. State Laws 125 

State Constitution 125 



VII 



Montana Human Rights Act 1 26 

Governmental Code of Fair Practices ... 127 

Equal Pay 127 

Handicapped 1 28(1 

Maternity Leave Act 128 

Some Prohibited Discriminatory Practices 128 

Generally 128 

Compensation and Benefits 128 

Recruiting 129 

Job Applications and Interviews 1 29 

Mandatory Retirement 129 

Statistical Discrimination 129 



CHAPTER 7. DISCHARGE AND LAYOFF FROM EMPLOYMENT 



A. Discharge 132 

1. Generally 132 

Employment Contract 132 

Termination — At Will Employees .... 133 

2. Discharge for Cause 136 

Generally 136 

Cause Defined 136 

Neglect of Duty; Negligence; 

Incompetence; Inefficiency . 137 

Disobedience of Employer's Rules, i 

Instructions or Orders . 137 

Cause Under Personnel Policy of 

Department of Administration 137 

3. Unlawful Reasons for Discharge 138 

4. Termination Procedures 139 

5. Appeals 140 

B. Other Disciplinary Action Against Employees ... 141 

C. Layoffs (Reductions in Force) 141 

Generally 141 

Layoff Procedures 142 

Layoff of State Employees 142 

D. Payment of Wages of Discharged Employees 142 

E. Blacklisting of Discharged Employees 143 

Statement of Reason for Discharge; 

Blacklisting 143 



vin 



PREFACE 

^Public Employers Defined and Covered by Handbook ... 1 
List of Montana Public Employers — Appendix A . . . . 

Categories of Labor Laws 3 

Chapter Breakdown; Coverage of Handbook 4 

Federal Versus State Law 4 

Supplements to Handbook 5 

Laws, Rules, Appendices and Forms 5 

Since the end of the Great Depression, labor law has been 
one of the most rapidly developing and vitally important areas 
of legislation affecting employment activities in our society, 
both to the employer and the employee. Today, employers, 
employees and organizations are expected to comply with a vast 
array of federal, state and local laws, administrative rules 
and court decisions affecting employment. Public employers 
face this problem as well. Indeed, in many instances, the 
^problem is more acute for government employers because 
additional requirements are imposed on them that are not 
always imposed on private sector employers. 



Public Employers Defined and Covered by Handbook. This 
handbook is written for public employers in Montana. It is 
intended to acquaint public employers with the basic 
requirements of employment law in nonlegal language. For 
purposes of this handbook, public employers include state 
government and all its agencies, local governments, and 
political subdivisions of government. Even though, it is a 
public employer, the federal government is not covered, 
although many of the same requirements discussed in this 
handbook apply to it as well. 



• 



- 1 - 



It is usually fairly easy to determine whether or not an 
employer is a part of state government. State agencies, the 
state institutions and the state University System are all 
part of state government and are included within the coverage 
of this handbook. Local government and political subdivision 
employers are more difficult to determine. Essentially, local 
governments and political subdivisions are units of government 
that owe their existence to the Legislature. They would not 
exist or have any power to perform some governmental function 
were it not for a law enacted by the Legislature that provides 
for their existence. Counties, cities and towns are all local 
governments; they are also political subdivisions of state 
government. Hospital, fire, bus transit, conservation, and 
even mosquito control districts are also political 
subdivisions of government; there are many others. A 

This handbook is intended to cover all such 

organizations. Where particular legal requirements vary from 

the typical public employer, such as minimum wages for 
firemen, that fact is pointed out. 

List of Montana Public Employers — Appendix A. A list 
of organizations in Montana that are covered by this handbook 
is included in Appendix A. This list is not exhaustive, but 
should be complete enough for most employers to decide whether 
they are in fact public employers and subject to the 
employment law requirements discussed in this handbook. 



Categories of Labor Laws. Labor law, of which employment 
law is only a part, can be divided into three main categories, 
'he first category relates to the combined activities of em- 
ployees in relation to their employer, and deals with such 
problems as labor unions, collective bargaining, and the regu- 
lation of strikes. Federal laws, such as the National Labor 
Relations Act of 1935 (the Wagner Act) and the Labor 
Management Relations Act of 1947 (the Taft-Hartley Act), and 
some state laws, are included in this category of labor law. 
The relationship between labor unions and public employers is 
not covered in this handbook except for brief references in 
some instances. 

The second category of labor law deals with the relation 

between employees and the labor union to which they may 

^'belong. Such issues as the internal affairs of labor unions 

and the election of union officers are included in that 

category. It is not covered by this handbook. 

The third category of labor law deals with the subjects 
covered by this handbook, laws dealing with employment itself. 
The relationship between the individual employee and his em- 
ployer, whether or not the employee belongs to a labor union 
or a collective bargaining unit, is covered in this category. 
Such basic areas of concern as minimum wages, overtime, child 
labor, discrimination in employment, federal contract 
compliance, prevailing wage laws, veterans' employment rights, 
nepotism (the hiring of relatives) and employees' rights and 
benefits are all included in this category. 



♦ 



Chapter Breakdown; Coverage of Handbook. This handbook 
consists of seven chapters, each addressing a different areaA 
of employment law. Chapter 1 describes the general legal 
relationship between an employer and an employee, a 
relationship which is essentially a legally binding contract 
between the employer and the employee: the employee agrees to 
perform a certain function for the employer and the employer 
agrees to pay so much for it. Chapter 2 discusses the legal 
requirements of hiring employees, employment preference 
rights, age restrictions, nepotism, and discrimination in 
hiring. In Chapter 3 wage laws are described, including 
minimum wage requirements, overtime pay, and method and time 
of paying employees. Laws governing the hours employees work 
are covered in Chapter 4. Employee rights and benefits are 
described in Chapter 5, covering such subjects as annual™ 
leave, sick leave, maternity leave, holidays, insurance 
coverage, and grievance procedures. Equal employment laws are 
briefly covered in Chapter 6. In Chapter 7, the laws 
governing the firing of employees is addressed. 

Federal Versus State Law. Oftentimes, both federal and 
state laws apply in employment law situations. For example, 
there is a federal minimum wage law and a state minimum wage 
law, and there are federal and state age discrimination laws. 
These overlapping laws can create a good deal of confusion for 
the public employer. Whenever this occurs, this handbook 
attempts to distinguish between the federal and state 
requirements and emphasize which law applies when. 

- 4 - 



Supplements to Handbook. Due to the continuing evolution 



of employment law, the handbook is designed so that it can be 
readily updated with supplements. The reader should make sure 
that the latest supplements are inserted before relying on the 
handbook as an up-to-date source of information. If unsure, 
the reader should check with the Labor Standards Division of 
the Montana Department of Labor and Industry, Capitol Station, 
Helena, Montana 59620 (449-5600). 

Laws, Rules, Appendices and Forms. In the back of the 
handbook are important laws and rules, as well as appendices 
and forms, for ease of reference and use by the public 
employer. The appendices and some of the forms are referred 
^ to in the text where applicable. An index of laws, rules, 
appendices and forms appears before each applicable section in 
the back of the handbook. 



W) 

- 5 - 



3?> 

Z O m 
C/> ■< 30 

x S _ 



CHAPTER 1 . THE EMPLOYMENT RELATIONSHIP 



A. Generally 6 

The Employment Contract 6 

Employee and Independent Contractor Defined . . 8 

Examples of Independent Contractors 10 

Administering Agencies — Appendix B 10 

B. Obligations of Employer 10 

Occupational Health and Safety 10 

Medical Care to Employees 11 

Seating 11 

Liability of Employers 12 

C. Obligations of Employee . 

Competence; Obedience; Performance 12 

Terminating Employees 12 

D. Prohibitions on Employer 13 

E. Liability of Employer 13 

Injuries to Employees 13 

Injuries Caused by Employees 13 

Sovereign Immunity 14 

Claims Against a Public Employer 14 

Liability Insurance 15 

Personal Liability 15 



• 



A. Generally 

The Employment Contract. When someone is employed by an 
employer, an employment contract exists. An employment 
contract is like any other legal contract; once it is made, it 
is enforceable by either party to the contract according to 
its terms. 

A contract of employment occurs when there is an 
agreement between the employer and the employee on the terms 
of the contract. Usually, employment contracts result from 
verbal discussion and are not written, but they are as legally 
binding as a written contract. The only requirement to create 
an employment contract is that one party to the contract makes 
^ an offer and the other party accepts that offer. For example, 

- 6 - 



if the employer says, "I will pay you $5.00 per hour to be my 
secretary" and the potential employee says "okay" or starts^ 
work, an employment contract then is made. Other terms of the 
employment relationship may not have been discussed, such as 
hours of work, holidays, quality of work performance or 
duration of employment. Oftentimes, these terms are dictated 
by laws and personnel policies of the employer, both of which 
are discussed in subsequent chapters. 

Although an employment contract can exist by oral agree- 
ment, written contracts usually are far less subject to mis- 
understanding. However, even written employment contracts 
contain provisions implied by court decisions. For example, 
under a recent Montana Supreme Court case there is an implied 
"covenant of good faith and fair dealing" in all employment 
contracts. ^^ 

All employers, including public employers, should be 
aware of this general contract law applicable to employment. 
In many instances, an employer has offered someone a job and 
the potential employee has accepted, creating an employment 
contract, and then later the employer has tried to rescind the 
employment offer for some reason. This not only creates bad 
relations for the employer, but can result in the employer 
being sued and held liable for damages for breach of contract. 
Therefore, an employer should not offer to employ someone 
until the offer is definite; or, if the offer is contingent 
upon some other factor, such as receipt of federal funds or 
approval of a superior, then that should be made clear to the ^p 

- 7 - 



potential employee so there are no misunderstandings. 

6 

Employee and Independent Contractor Defined. The law 
books are full of court cases and discussion of the terms 
"employee" and "independent contractor." For purposes of this 
handbook, only a general definition can be given. 

Generally, an "employee" is someone who is hired by an 
employer and who performs some service or function while under 
the direction and control of the employer. An "independent 
contractor," on the other hand, is someone hired by an 
employer who performs a service or function essentially 
independent from the employer and outside the employer's 
direction and control. Of course, there are different degrees 
of control, and the circumstances will vary from one situation 
^ to another. Therefore, the law that has developed over the 
years on this question has adopted several factors or tests 
that are used to determine the degree of control. Some of 
these tests are: (1) direct evidence of control by the 
employer; (2) the method of payment; (3) the furnishing of 
equipment; and, (4) the right to fire the person or entity 
employed. 

For example, if the employer exercises (or has the right 
to exercise) control over how a particular job is to be done 
and not just act over the results, and can add to the duties 
of the person employed beyond those agreed to when the person 
was hired, this is direct evidence of employer control. Addi- 
^rtionally, if payment is made on a time basis (by the hour ; 

- 8 - 



day, week, etc.)/ rather than on a completed contract basis, 
the person performing services is more likely to be an 
employee than an independent contractor. If the employer^P 
furnishes the equipment to be used, an employee-employer 
relationship may be indicated. If the worker furnishes the 
equipment, an independent contractor relationship is 
indicated, but only if the equipment furnished by the con- 
tractor is significant, such as a computer or a road grader, 
not something like a chain saw or a typewriter. Finally, if 
the employer maintains the right to fire the person employed 
without liability, and at any time, an employee-employer 
relationship probably exists. 

Application of the above tests must be approached with 
caution because circumstances are different in each case. In 
fact, slightly different tests might be applied to each^B 
situation, depending on the employment law under which the 
question arises. Usually, at least in the application of 
minimum wage laws, workers' compensation laws and other laws 
having social goals, the courts tend to find an 
employee-employer relationship, rather than an independent 
contractor relationship. Evidence of the direction that 
courts take can be seen in the legal rule that all four of the 
above tests must be met to establish an independent contractor 
status, while only one need be met (on the other side of the 
test) to establish an employee relationship. There is a pre- 
sumption that an employee-employer relationship exists, unless 
the employer can prove that all four tests have been met. 
There is no such relationship as "contract labor." A contract^ 

- 9 - 



for labor creates an employee-employer relationship. 

In most cases, it will be fairly easy to determine 
whether someone is an employee and therefore entitled to 
minimum wage, overtime compensation, and other employee 
benefits, or an independent contractor and therefore exempt 
from these benefits. In nearly all cases of persons working 
for a public employer, they are employees. 



Examples of Independent Contractors. The following are 
examples where an independent contractor status probably 
exists : 

(1) A lawyer on retainer to defend the employer in a 
lawsuit ; 
t (2) Clerical work contracted through an independent, 

established secretarial firm on a project basis; 
(3) Agreements with professional consulting firms. 



t 



Administering Agencies — Appendix B. More will be said 
about employees and independent contractors in the context of 
the particular employment laws being discussed. If questions 
arise, the public employer should check with the government 
agency administering the law under which the questions arise. 
A list of employment laws, the agency or agencies administer- 
ing each one, and addresses are included in Appendix B. 

B. Obligations of Employer 
^p ] Occupational Health and Safety. When an employee-employer 

- 10 - 



relationship is established, the employer has certain legal 
obligations to the employee, and vice versa. The particular^ 
obligation which an employer owes to his employee will depend 
on the type of employment, the terms of the employment 
contract, and applicable laws, several of which are described 
in this handbook. Generally, however, the employer must see 
that the workplace is reasonably safe, and must furnish 
equipment and suitable facilities in which to work. The 
obligation of an employer to provide a safe workplace becomes 
more important as the job safety risks increase. Today, of 
course, federal and state laws dealing with occupational 
health and safety provide for work safety in great detail. 
Those laws are described in Chapter 5. 

Medical Care to Employees. An employer is under no^ 
general legal obligation to provide medical care to an 
employee who is injured or who becomes ill while working, 
although an employer may assume such obligation by contract or 
by his conduct. Additionally, in emergency situations where 
the life or serious bodily injury to an employee is 
threatened, the employer probably has a legal obligation to 
care for or furnish medical aid. Workers' Compensation insur- 
ance provides compensation to the employee for his injuries 
and medical expenses. 

Seating. A law enacted by the Montana Legislature in 
1913 requires an "establishment" employing any person to^ 
provide suitable seats for all employees. whether this law 

- 11 - 



applies to public employers is not clear, but common sense 
^ * dictates that all public employers should comply. In today's 
workplaces the unavailability of chairs probably is not a 
problem. 

Liability of Employers. The liability of public 
employers for their employees* activities is discussed in part 
E of this chapter. 

C. Obligations of Employee 
Competence; Obedience; Performance. Besides the obliga- 
tions imposed on an employee in the employment contract 
between the employer and the employee, the law implies other 
general obligations on an employee. For example, the employee 
A f must be competent to perform the duties for which he was 
hired, and he must work in a careful and workmanlike manner. 
The employee must obey the lawful rules, orders and 
instructions of the employer, at least insofar as they are not 
unreasonable. An employee must conduct himself so as not to 
injure the business of the employer, which means that 
employees of public employers have an implied obligation to 
perform their duties in such a manner that will enable public 
employers to meet their obligations to the public. 

Terminating Employees. See Chapter 7 for the situations 
in which an employee can be fired for failing to meet his 
obligations to an employer. 



- 12 



D. Prohibitions on Employer 
Montana laws contain various provisions prohibiting cer-J 
tain activities by employers. Nearly all of these relate to 
hiring or firing of employees and are therefore covered in 
Chapters 2 and 7. 

E. Liability of Employer 
The subject of the liability of an employer arising out 
of an employee-employer relationship constitutes a large part 
of the law regarding employment. It is a subject which is es- 
sentially outside the scope of this handbook. However, some 
general principles can be stated which may be helpful to the 
public employer in Montana. 

Injuries to Employees. Until the advent of workers' com-J 
pensation laws and other employers' liability laws, an 
employer generally was not liable for injuries to employees in 
the discharge of their duties, unless the injuries were caused 
by the negligence of the employer. Today, however, the 
workers' compensation laws do away with the requirement of 
negligence and give employees the right to be compensated for 
injuries related to their employment. Nearly all employers, 
including public employers, are required to participate in the 
compensation system, as explained in Chapter 5. 

Injuries Caused by Employees. An employer can also be 
liable for injuries to third persons (outside parties) 
inflicted by an employee. It is universally recognized in law' 

- 13 - 



§ 



that an employer is liable for injuries to the person or 
property of third persons occasioned by the torts, negligence, 
frauds, deceits, concealments, misrepresentations and other 
malfeasance or misfeasance of his employee, which, even though 
not directly authorized or approved by the employer, are 
within the scope of his employment. In layman's terms, this 
means that if an employee makes a substantial mistake or is 
careless and causes damages, the employer might be liable. 

Sovereign Immunity. Historically, public employers were 
generally immune from liability on the legal theory that the 
king (the government) could do no wrong. This immunity is 
called the doctrine of sovereign immunity. In Montana, 
however, this doctrine was abolished by the new Montana 
B Constitution adopted in 1972, except that the Legislature is 
authorized to reinstate sovereign immunity and limit liability 
of public employers. The Legislature exercised this exception 
in 1977 and again in 1983 after its action in 1977 was de- 
clared unconstitutional by the Montana Supreme Court, and has 
limited liability of public employers to a maximum of $300,000 
for each claimant and $1 million for each occurrence. 

Claims Against a Public Employer. Under Montana law, if 
an injured person thinks he has a claim for money damages 
against the state government, he must file a claim for damages 
with the State Department of Administration. If the claim is 
against a local government or political subdivision, it must 
"be filed with its clerk or secretary. This claim filing is a 

- 14 - 



required first step before the claimant can sue the public 
employer in court. A 

Liability Insurance. Public employers in Montana may 
carry liability insurance to cover their liability for 
damages, or they can elect to self-insure (pay for damages out 
of public funds) . Political subdivisions and local governments 
can combine to procure liability insurance if they wish. In 
addition, if an employee of a public employer is sued for 
damages, the public employer must pay for the employee's legal 
expenses and damages awarded, unless the employee is found by 
the court to be liable personally and not as an employee 
acting within the scope of his employment. 

Personal Liability. It is possible that public officers^ 
and public employees can be liable personally for damages. 
This usually occurs when the official or employee commits some 
injurious act outside the scope of his government job. For 
example, as a result of one lawsuit in the early 1940's in 
Montana, a game warden might be liable personally for seizing 
and confiscating a rifle from a hunter who was hunting game 
illegally. The law did not authorize the game warden to 
confiscate such property as a part of his enforcement powers; 
therefore, he acted outside the scope of his employment. 



- 15 - 



3D 

o 5 

i-> 
S|3 

S ^ m 

m « 3D 



t 



CHAPTER 2. HIRING REQUIREMENTS 

Generally 16 

B. Employment Preference 18 

1. Veterans 18 

State Law 18 

Veteran Employment Preference — State 

Government, Cities, and Counties ... 18 

What Constitutes a Preference 18 

Re-employment of Veterans 19 

Federal Law 19 

2. Disabled Civilians 19 

3. Montana Labor — Public Works Contracts . . 20 

Montana Law 20 

Conflicts with Veteran Preference .... 20 

C. Child Labor 20 

State Law 20 

Federal Law 21 

D. Nepotism 22 

Nepotism Defined 22 

The Montana Nepotism Law 23 

Degree of Relationship 23 

Examples of Relatives Covered 23 

• Application of the Nepotism Law 24 

Specific Situations 25 

The Human Rights Act and Nepotism ....... 25 

Agreements Between Employers 26 

Purpose of Nepotism Law; Penalties 26 

E. Equal Employment and Discrimination 27 

F. Miscellaneous Hiring Requirements 27 

Medical Examination 27 

Lie Detector Tests 27 

Employment of Aliens 27 

A. Generally 
The public employer is often confronted with several laws 
requiring preference in hiring (veterans' preference laws, for 
example) , age restrictions (child labor laws) , and other laws 
establishing prohibitions or preferences on the employer when 
a decision is made to hire an employee. Hiring requirements 
And restrictions can often be confusing and frustrating for 



16 



the employer; mistakes easily can be made that may lead to 
lawsuits and considerable expense. This chapter describes and(P 
discusses the most important employment laws that apply to 
public employers at the hiring decision stage. 

It should be noted that several requirements may be in- 
volved before a decision is made to hire an employee. Equal 
employment and civil rights laws may require the adoption of 
affirmative action plans to help insure that employees are 
hired in a nondiscriminatory manner; even if plans are not 
adopted, hiring of employees by public employers cannot be 
conducted so as to discriminate against certain individuals or 
classes. These requirements are discussed briefly in Chapter 
6. In addition, the employer may have adopted its own re- 
cruiting and hiring policies, such as policies dealing with^p 
advertising vacant positions, notifying existing employees of 
vacant positions, job application procedures, time periods to 
apply, interviewing, and so forth. Those policies, once law- 
fully adopted, should be followed. In fact, in many instances 
the public employer is required to follow such policies. (See 
Chapter 5 for a more thorough discussion of personnel policies 
and procedures.) This chapter assumes that steps leading up 
to a hiring decision have been correctly followed. 

Finally, from a legal viewpoint, the hiring of an em- 
ployee constitutes a contract. See Chapter 1 for a discussion 
of the employment contract. 



- 17 



B. Employment Preference 

$ 

1 . Veterans 
State Law. Montana, as most states, has adopted employ- 
ment preference laws for hiring and rehiring veterans and even 
for certain relatives of veterans. They are described below. 

Veteran Employment Preference — State Government, Cities 
and Counties. Every "public department" of the State of 
Montana (apparently meaning ail agencies and institutions of 
state government) and cities and counties must give veterans, 
their spouses and surviving spouses (widows or widowers) , and 
the other dependents of disabled veterans, a preference for 
appointment and employment. The law applies to employees of 
^state government, cities and counties; it may also apply to 
persons hired by private contractors working on public works 
(construction projects) of the state, cities and counties, al- 
though the statute is not clear on that point. It also ap- 
plies to public officers of those public employers; one Mon- 
tana Supreme Court case even applied the preference to the po- 
sition of city attorney. The law probably would be inter- 
preted to apply also to political subdivisions of state gov- 
ernment, cities and counties, since it applies to state gov- 
ernment, cities and counties themselves. 

What Constitutes a Preference. What constitutes a 
^preference is not made clear in the statute. As interpreted 
^by the Montana Supreme Court in a 1983 case (Crabtree) , pref- 

- 18 - 



erence means that the veteran (or his or her spouse or depen- 
dent, as the case may be) must be hired over everyone else if 
that person meets only the minimum qualifications for the po-^^ 
sition — it is an absolute preference. In addition, if an 
oral or written examination is required for employment (such 
as under the state merit system) , extra points must be given 
for persons covered by the preference law (10 points if a dis- 
abled veteran or a spouse, surviving spouse, or dependent of a 
disabled veteran, and 5 points for all other veterans and 
their eligible relatives) . 

Re-employment of Veterans. Another state law provides 
that any individual drafted into the armed forces or any 
reservist who is called into active duty, and who must leave 
his position of employment, is entitled to his old job back or 
a position with similar seniority, status and pay when he^^ 
returns from the military. Application for re-employment has 
to be made within 90 days after discharge. All employers 
(public and private) are covered by this law. 

Federal Law. Congress has enacted veteran employment 
laws similar to Montana's, but they apply only to federal and 
private employers. A federal re-employment of veterans law, 
however, similar to the state law described above, does apply 
to state and local governments. 

2. Disabled Civilians 
Also contained in Montana's veterans' employment 
preference law is a requirement* that "disabled civilians''^ 

- 19 - 



recommended by the Rehabilitative Services Division of the 
^tate Department of Social and Rehabilitation Services be 
given a preference in appointment and employment. The re- 
quirement applies to the same public employers and in the same 
manner as the state veterans' preference described above. 

3. Montana Labor — Public Works Contracts 
Montana Law. Contracts for state, county, municipal, 
school, and heavy highway construction, services, repair, or 
maintenance work must contain a provision requiring the 
contractor to give preference to employment of Montana 
residents. This requirement covers contracts let by state 
government, and cities, towns, counties and school districts. 
It is also applied to political subdivisions such as hospital 
And fire districts. Since the law includes all construction, 
service, repair and maintenance contracts, it is rather com- 
prehensive in its coverage. 

Conflicts with Veteran Preference. For contracts involv- 
ing federal-aid funds, if there is a conflict between the Mon- 
tana labor preference and the federal veterans' preference 
discussed in part 1 of this chapter, then the veterans' pref- 
erence takes precedence. 

C. Child Labor 
State Law. Employment of children under the age of 16 in 
dangerous, unhealthful or immoral occupations is prohibited by 
Apntana law. What is a dangerous, unhealthful or immoral oc- 

- 20 - 



cupation is not defined, but employment in mines, mills, 
smelters, railroads and elevators or where any machinery i ^k 
operated is specifically included. In addition, the 
employment of children under the age of 18 as bartenders, 
waiters, waitresses or any other similar jobs which involve 
serving customers liquor, beer or wine in an establishment 
which sells those products is also prohibited. These laws 
apply to public as well as private employers. 

Federal Law. The federal Fair Labor Standards Act 
prohibits the employment of children by any covered employers, 
including public employers, in what is termed "oppressive 
child labor." The law itself and regulations adopted by the 
Secretary of Labor prohibit employment of minors below a cer- 
tain minimum age; the minimum age that is established is basejW 
upon the type of employment. 

For example, 16- and 17-year-olds may be employed at any 
time in any occupation, except a nonagricultural occupation 
which has been declared hazardous by the Secretary of Labor. 
Children under 18 years of age cannot be employed in 
occupations such as driving motor vehicles; working with 
explosives; certain woodworking, metal working, bakery, paper 
products, and meat-processing work; work with circular and 
band saws, guillotine shears and hoisting machinery; work in 
logging and sawmilling; mining, roofing and demolition; and 
some excavation work. Public employers could be involved in 
some of these hazardous occupations, such as driving motor v^^ 

- 21 - 



hides or helping on a refuse truck; operating saws in a high- 
way department sign shop; or using a meat slicer in the 
kitchen of a school, nursing home, or hospital. There are 
even stricter rules for employment of 14- and 15-year-olds, 
including limits on their hours of employment. Employment of 
minors under 14 years of age is prohibited, except in occupa- 
tions like delivery of newspapers, casual labor around a pri- 
vate home, and certain kinds of agricultural employment. 

There is some question whether the federal child labor 
laws and regulations described above apply to state and local 
governments and political subdivisions. The United States 
Supreme Court ruled in 1976 in the National League of Cities 
v. Usery case that the minimum wage and overtime provisions of 
the federal Fair Labor Standards Act cannot constitutionally 
W^ applied to those state and local government activities 
which have been "traditionally" exercised by such entities. 
Since the federal child labor laws are part of the same Act, 
but were not mentioned in the Supreme Court decision, the 
United States Department of Labor takes the position that the 
federal child labor laws still apply to all public employers. 
That position has not been tested in the courts. (See Chapter 
3 for a more thorough discussion of this court ruling.) 

D. Nepotism 
Nepotism Defined. Nepotism is the appointment or 
employment of a relative by a public official. Montana has 
A a law prohibiting this practice since 1933. Because 

- 22 - 



questions frequently arise concerning the application of 
Montana's law, it is discussed at length below. ^ 

The Montana Nepotism Law. The nepotism law in Montana 
prohibits any person or any member of a board, bureau or 
commission, or the head of any department of state government 
or any political subdivision from appointing a relative to any 
position of "trust or emolument." What is a position of 
"trust or emolument" is not defined in the statute, but it 
means any job where the employee has duties to perform for the 
employer or gets paid (which amounts to nearly every 
position) . Relatives are defined to mean persons related to 
the board member or department head by blood relationship 
(consanguinity) within the "fourth degree" or by marriage 
(affinity) within the "second degree." ^k 

Degree of Relationship. Figuring out degrees of rela- 
tionship can be confusing. The easiest way is to think of a 
degree as each step that must be taken on a family tree to get 
to the relative in question, except that the step from the ap- 
pointing person to his or her own spouse is not counted 
(however, a husband and wife are considered to be related to 
each other by one degree) . Start counting the steps from the 
appointing person to the relative, and not vice versa. 

Examples of Relatives Covered. A person's spouse, 
father, mother, son and daughter are all relatives of one 
degree. Grandchildren and grandparents are relatives of tv^P 

- 23 - 



degrees. Aunts and uncles are relatives of two degrees (one 
^step to the parent and one step to the brother or sister of 
^:he parent) . A son-in-law is a relative by marriage of one 

degree (remember that the first step to a spouse is not 

counted) . 



Application of the Nepotism Law. Once the method of 
figuring out which relatives are covered under the law is 
understood, other legal questions also arise. Some of these 
questions have been answered by the courts or by official 
opinions of the Montana Attorney General. The answers are 
summarized as follows: 

(1) The law applies to all agencies of state government 
and to all political subdivisions, including school 

£ boards, county commissioners, and similar bodies 
(any public employer covered by this handbook — see 
Appendix A) ; 

(2) The law applies to boards and commissions even 
though only one member would be related to the 
person to be appointed; 

(3) The law cannot be evaded by temporarily resigning or 
by abstaining from voting; 

(4) An adopted person is considered to be in the same 
position as if he or she were related to the 
adopting parent by blood; 

(5) The law restrains only the appointing authority, not 
a higher authority who only confirms or votes for 

^f the confirmation of an appointment already made. 

- 24 - 



Specific Situations. The following are specific 
situations which have arisen in Montana and which have beei^ 
ruled upon by the courts or the Attorney General: 

(1) There is no violation of the nepotism law where a 
contract of employment for a tenured teacher is to 
be renewed by the school board and one of the board 
members is a relative of the teacher (tenured 
teachers have constitutional rights which cannot be 
taken away by a nepotism law) ; 

(2) A newly elected trustee of a school board whose 
relative was hired during a previous board term may 
serve on the board without violating the nepotism 
law if the relative's employment is continuous and 
not subject to rehiring during the new trustee's 
term; A 

(3) It is prohibited nepotism for a city mayor to 
appoint a son-in-law as police chief, even if the 
son-in-law is the most qualified person for the job; 

(4) It is illegal for a school board to accept the 
resignation of a board member's sister-in-law as 
administrative secretary and then reappoint the 
resigned member back to the board; 

(5) A city alderman is not prohibited from voting to 
confirm the appointment of his son by the mayor. 

The Human Rights Act and Nepotism. The Montana Human 
Rights Act may have nullified the nepotism law in certain 
instances. (See Chapter 6 f or * a description of the Huma™ 

- 25 - 



Rights Act.) The Attorney General has ruled that the Human 
Rights Act overrides the nepotism law insofar as the employ- 
ment of relatives related by marriage is concerned, because 
the Act prohibits discrimination based on marital status, and 
the prohibition against hiring a marriage relative would be 
discrimination based on marital status. Therefore, the hiring 
of relatives related by marriage would be legal under this 
interpretation. However, this interpretation has not been 
specifically tested in the courts. 

Agreements Between Employers. Under Montana law, it is 
also illegal for an appointing authority to make an agreement 
with another appointing authority to appoint a covered 
relative. For instance, it would be illegal for the alderman 
'in the last example above to get the mayor to agree to appoint 
the alderman's son. Similarly, it would probably be illegal 
for a public official to agree with another public official to 
appoint a relative of the other public official. 

Purpose of Nepotism Law; Penalties. The purpose of the 
nepotism law is to reduce political patronage and appointment 
of unqualified people to public positions. Sometimes, it can 
have the opposite effect. Nevertheless, it is a law that must 
be strictly observed. It is violated frequently because of a 
lack of knowledge of its existence on the part of the public 
employer. Failure to comply with its provisions can result in 
.criminal penalties and invalidation of an appointment. 



- 26 



E. Equal Employment and Discrimination 
As was mentioned at the beginning of this chapter, equa."W 
employment and discrimination laws must always be taken into 
consideration when hiring employees. Today these laws have 
wide-ranging ramifications on public employers, and prohibit 
discrimination in hiring based on sex, race, national origin, 
age, handicap, political beliefs and marital status. Because 
of the breadth of this subject, Chapter 6 is devoted 
exclusively to this topic. 

F. Miscellaneous Hiring Requirements 

Medical Examination. It is unlawful under Montana law 

for any employer to require an applicant for employment to pay 

for the cost of a medical examination or the cost of 
furnishing records of a medical examination as a condition o^ 

employment. The law apparently applies to both public and 
private employers. 

Lie Detector Tests. Lie detector tests are prohibited as 
a condition of employment, except for public law enforcement 
agencies. 

Employment of Aliens. No employer may knowingly employ 
an alien who is not authorized to accept employment in this 
country. 



27 



i 

3° m -o 
O c/> -« 



4 



♦ 



CHAPTER 3. WAGES AND WAGE PROTECTION 



A. Generally 30 

B. Minimum Wage Requirements 31 

1 . Federal Versus State Law 31 

The National League of Cities v . 

Usery Case 31 

Federal Interpretation 32 

Attorney General's Interpretation .... 32 

Practical Application .... 33 

2. State Minimum Wage Law 34 

Generally 34 

Construction of Law 34 

Effect on Employment Contracts ..... 35 

What Constitutes Wages 36 

Overtime Compensation 37 

1. Generally 37 

The Workweek ........ 37 

The Overtime Rate 38 

What Constitutes Overtime 38 

The Regular Rate 39 

2. Working Time 4 

Generally 4 

Consent or Knowledge of Employer .... 41 

3. Nonproductive Time 41 

Generally 41 

Leave, Illness, Vacations and 

Holidays 42 

Attendance at Meetings and Seminars ... 42 

Meal Periods 42 

Rest Periods 43 

Sleeping Time 43 

Employees Residing at Employer's 

Premises 43 

Preparatory and Concluding 

Activities ..... 44 

Travel Time 44 

Waiting Time 44 

Employees Covered by The Wage and Hour Lav/ ... 45 

Generally 45 

Who Is An "Employee" 4 5 

Exemptions 4 6 

1. Generally 46 

Time Unit in Applying Exemption .... 47 

2. Executive, Administrative, and 

Professional Employees 47 

Generally 47 

Factors Determining Exemption 47 

Executives 4 8 

Administrators 50 

- 28 - 



57 



Professionals 52 

Trainees as Executives, Administrators 

and Professionals 5^k 

3. Agricultural Employees 5^ 

Generally 54 

Farm Worker Defined 54 

Minimum Wages of Farm Workers 55 

4. Apprentices and Learners 55 

Generally 55 

Learner Defined ..... 55 

Learner Certificate — Appendix C . . . . 56 

5. Handicapped Employees 56 

Generally 56 

Handicapped Worker Defined 56 

Handicapped Worker Certificates 57 

6. Miscellaneous Exemptions 57 

Generally 57 

Student Learner 

Employees of Sheriffs' Departments, 

Health Care Facilities, Municipal and 

County Governments, and Firefighters. . 57 

F. Record Keeping Requirements Under the Wage 
and Hour Law 58 

1 . Generally 58 

2. General Requirements 59 

Form of Records 59 

Payroll Records . 

Payroll Records of Bona Fide Executive, 

Administrative and Professional 

Employees 6 

Preservation of Records; Inspection ... 61 
Records of Board, Lodging or Other 

Facilities 61 

Records of Learner, Apprentice, 

Student Learner and Handicapped 

Workers 61 

G. Prevailing Wage Requirements 62 

1. Generally 62 

2. Federal Prevailing Wage Law 62 

Davis-Bacon Act — Appendix D 63 

Prevailing Wage Determination 

Under Davis-Bacon 63 

Laborers and Mechanics Under 

Davis-Bacon 65 

Construction Projects Covered by 

Davis-Bacon 65 

Overtime Pay Requirements 66 

Effect on State and Local Governments . . 67 

3. State Prevailing Wage Law 67 

State "Little Davis-Bacon Act;" 

Conflicts with Federal Law 67 

Prevailing Wage Determination Under 

State Law 

- 29 - 



1 



1 



Employees Covered by State Law 69 

Projects Covered by State Law 69 

asi Public Contracting Agencies Covered 

by State Law 69 

Other Requirements 6 9 

Penalties for Non-compliance 70 

H. Other Wage Protection Laws 70 

1 . Generally 70 

2. Special Wage Level Laws 71 

3. Wage Protection of Restaurant 

Employees 71 

Generally 71 

Bonding Requirements 71 

4. Contractor's Bond 72 

5. Wage Payment 72 

Payment of Wages Generally 72 

Deductions 73 

Payment When Employee Terminated .... 73 

Enforcement 73 

Payment to State Employees 74 

A. Generally 
Nearly all employees in Montana, public and private, are 

M entitled to a minimum wage or to wage protection under various 
state and federal laws. The federal Fair Labor Standards Act 
(also known as the Wage and Hour Law or the FLSA) enacted by 
Congress in 1938 regulates the wages and hours of employees 
engaged in commerce or in the production of goods for 
commerce. With some exceptions, it establishes a minimum 
hourly wage that must be paid to such employees; since January 
1, 1981, the minimum wage has been $3.35 per hour. The FLSA 

I also requires that such employees be paid at a rate of *\\ 
times their regular hourly rate for hours worked in excess of 
40 hours during any workweek (also called "time and one-half 
for overtime") . Similarly, a state minimum wage and overtime 
law which was enacted in 1971 is intended to cover most 
employees not covered by the federal law. Under the state law 

- 30 - 



the minimum hourly wage is currently set at $2.75 an hour; it 
also requires time and one-half for hours worked in excess o 
4 hours in any workweek. 



t 



Under the federal and state wage and overtime laws, and 
other laws, employees are also entitled to be paid in a 
certain manner. In addition, employees of contractors doing 
construction work for state and local governments are entitled 
to be paid a "prevailing wage" pursuant to the federal 
Davis-Bacon Act and a similar law enacted in Montana. 

The application of all these laws as they relate to wages 
and wage protection of public employees is discussed in this 
chapter. Due to the complexity of these laws and the 
questions that frequently arise concerning which law applie 
to a given situation, they are discussed in detail. 

B. Minimum Wage Requirements 

1 . Federal Versus State Law 
Federal and State Coverage. The federal Fair Labor 
Standards Act, when originally enacted in 1938, did not cover 
employees of state and local governments. In 1971 the Montana 
Legislature enacted a state minimum wage and overtime law 
patterned after the federal Act to cover employees of state 
and local government in Montana. Then in 1974 Congress 
amended the federal Act to cover such employees also. 



« 



The National League of Cities v. Usery Case. The ques- 

- 31 - 



tion of which minimum wage and overtime law now applies was 
^oasically resolved by the United States Supreme Court in 1976 
in the case of National League of Cities v. Usery . The Court 
held that the imposition of federal wage and overtime require- 
ments on state and local governments was unconstitutional as 
applied to the integral operations of states and their 
political subdivisions in areas of traditional governmental 
functions. According to the Court, areas of traditional 
governmental functions include, among others, schools and 
hospitals, fire prevention, police protection, sanitation, 
public health, and parks and recreation. They do not include, 
among other exclusions, the operation of a railroad by the 
state. 

Federal Interpretation. Application of the Supreme 
Court's test of "traditional governmental functions" is some- 
times difficult. The Wage and Hour Division of the United 
States Department of Labor has interpreted the Court's ruling 
to mean that libraries and museums are traditional functions 
of state and local governments, but that the sale of alcoholic 
beverages through state liquor stores is not. So it would 
appear, at least as interpreted by the federal agency admin- 
istering the FLSA, that Montana's state-owned liquor store 
employees come under the federal minimum wage and hour over- 
time law and not the state law. 

% Attorney General's Interpretation. The Montana Attorney 
General has taken a different approach. In an opinion issued 

- 32 - 



by him in 1980 (38 OP. ATT'Y GEN. NO. 83), the Attorney 
General flatly stated that "The FLSA no longer applies tes 
state, county, or municipal employees." The Attorney 
General's opinion, which cites the National League of Cities 
case as the basis for his ruling, conflicts with the current 
view of the federal government, as discussed above. Of 
course, the federal government is not obligated to follow the 
Attorney General's opinion. 

Practical Application. As a practical matter, the 
problem of which law applies makes little difference. The 
primary distinction between the federal and state minimum wage 
and overtime law as it applies to public employees is the 
level of the minimum hourly wage set by each: $3.35 per hour* 
by federal law, and $2.75 per hour by state law. In all other 
respects the federal and state laws and the rules adopted 
under them by the administering agencies are nearly identical, 
including the exemptions under each. Furthermore, the 
National League of Cities case has essentially excluded most 
activities of state and local government in Montana from the 
federal law. Therefore, if employees covered by the state law 
are being paid $3.35 per hour or more, and all other 
requirements of the state law are complied with as discussed 
in this chapter, compliance with the federal law if it applies 
is also assured. 

Since nearly all employees of state and local government 
are paid at least $3.35 per hour, and most functions of statt 



33 



and local government in Montana are excluded from the federal 
Aiinimum wage and overtime law as a result of the National 
League of Cities case, it is not necessary to describe the 
federal law in detail in this chapter. In those few instances 
where a public employer plans on paying an employee less than 
$3.35 per hour, and all requirements of the state law are 
complied with, the employer should check with the appropriate 
federal or state agency listed in Appendix B to determine 
whether the federal or state law is applicable. 

It must be emphasized that the National League of Cities 
case did not decide the constitutionality of other parts of 
the FLSA, such as child labor and equal pay laws. Therefore, 
it should be assumed that those parts are still applicable to 
tate and local governments. 



f 



2. State Minimum Wage Law 
Generally. The state minimum wage law requires, with 
certain exceptions, that every employer must pay wages at a 
minimum hourly rate, currently set at $2.75 per hour. 

Construction of Law. The courts have uniformly held that 
since laws such as the state minimum wage and overtime law are 
remedial in nature and designed to achieve social goals, they 
should be construed liberally in favor of the employee. Any 
doubt as to the interpretation or application of the law 
should therefore be resolved in favor of coverage of the 
mnployee. This means that the exemptions from the law, 

- 34 - 



discussed later in this chapter, should be strictly construed 
against the employer so that any doubt is resolved in favor of 
the employee. :v * 

Effect on Employment Contracts. Employment contracts, 
such as individual agreements between the employee and the 
employer and collective bargaining agreements between a union 
and an employer, made in violation of the law, are ineffec- 
tive. Employees cannot contract away or waive the rights 
given them under the law. Therefore, any agreement between an 
employer and employee in which the employee (or group of 
employees) agrees to be paid less than the minimum wage, or to 
accept overtime compensation that is less than that mandated 
by the law, will be void. Employment contracts are valid 
insofar as they provide for minimum wage and overtime- 
compensation at rates at least equal to those prescribed by 
the law and the rules adopted thereunder by the administering 
agency (the Montana Department of Labor and Industry) . 
Therefore, it is always possible for an employer to give 
employees more benefits than required by the law; for example, 
an employer could decide (by agreement or policy) to pay 
employees time and one-half for overtime in excess of eight 
hours a day if it wished. 

An employment agreement may specify a weekly, monthly or 
yearly salary for an employee, provided the employee is still 
paid the required minimum wage per hour. Determining 
compliance is done easily by dividing the weekly salary by the 
number of hours actually worked during that workweek; the 

- 35 - 



r 



result must equal or exceed the minimum wage. How salaries 
nd hours a'ctually worked are determined is described later in 
this chapter. 



What Constitutes Wages. The term "wages" as used in the 
state minimum wage law means the compensation due to an 
employee for his employment, payable in legal tender of the 
United States or checks on banks,- convertible to cash, subject 
to such allowances as may be permitted by regulations of the 
Commissioner of the Montana Department of Labor and Industry. 
Wages also include the reasonable cost to the employer, as 
determined by the Commissioner, of furnishing an employee with 
board, lodging or other facilities, if such board/ lodging or 
other facilities are customarily furnished by the employer to 
'its employees; however, the reasonable cost of such board, 
lodging or other facilities cannot exceed 40% of the total 
wage paid to the employee. 

The Commissioner of Labor and Industry has adopted 
several regulations implementing this provision of the law. 
Among other things, he has determined that the cost of 
facilities furnished primarily for the benefit or convenience 
of the employer will not be recognized as reasonable, and may 
not be included in computing wages. The cost of uniforms 
where the nature of the job requires the employee to wear a 
uniform is an example. In addition, to be included in the 
calculation of wages / the employee must not only receive the 
benefits of the item furnished/ but his acceptance of it must 

- 36 - 



be voluntary and uncoerced. This would mean, for example, 
that the cost of furnishing lodging and meals to employees who< 
are required to stay in the employer's facilities cannot be 
included in the calculation of wages. 

C. Overtime Compensation 

1 . Generally 
The state overtime compensation law requires, with 
certain exceptions, that employees must receive *\\ times their 
regular hourly wage rates for employment in excess of 4 hours 
in a workweek. Student employees at amusement or recreational 
areas that operate on a seasonal basis and who are furnished 
their board, lodging, or other facilities are entitled to \\ 
times their hourly wage rate for hours worked in excess of 48 
hours in a workweek. 

The Workweek. The "workweek," consisting of seven 
consecutive 24-hour periods, is the standard measure of time 
for computing compliance with the overtime compensation law. 
It need not coincide with the calendar week, but may begin on 
any day and at any hour of the day. Each workweek stands 
alone, so that hours worked during two or more weeks may not 
be averaged to avoid overtime pay. 

Different workweeks may be established for each employee, 
but once established, a workweek remains fixed regardless of 
the schedule of hours the employee works. However, the 

- 37 - 



• 



workweek of an employee can be changed by the employer if it 
is intended to be permanent and is not designed to evade the 
overtime requirements of the law. The rules of the 
Commissioner specify how the employee's wages are to be 
calculated when a change in workweek occurs. 

Once the workweek for an employee is established, 
compliance with the overtime compensation law is determined by 
totaling the number of hours worked by the employee in that 
workweek. If the total exceeds 40 (48 in the case of students 
employed at recreational areas as described previously) the 
employee must be paid time and one-half for the excess hours. 

The Overtime Rate. The overtime compensation law does 
not prohibit paying more than *\\ times the regular hourly 
rate. Employers must pay the overtime rate, however, even 
where the employee is paid an hourly wage greater than the 
minimum wage. Thus an employment agreement which establishes 
an overtime rate less than \\ times the regular rate would be 
void (unless, of course, the employee is exempt from the 
overtime compensation law, as described in part E of this 
chapter) . 

What Constitutes Overtime. Overtime has a variable 
meaning under the overtime compensation law, depending on the 
particular situation. It can be work after regular hours, 
work beyond hours prescribed by contract which are less than 
the statutory maximum number of hours (40 or 48; see 
discussion above) , or work outside the regular work pattern, 

- 38 - 



as for example, work on weekends or holidays. 

Overtime includes hours worked by the employee in excess 
of the maximum which the employee is actually "suffered or 
permitted" to perform. This means that even though the 
employer has a policy that no overtime will be allowed unless 
it is specifically approved in advance, the employee is still 
entitled to time and one-half for overtime hours actually 
worked with the knowledge and acquiesence of the employer. 

In instances where an employee has two jobs, each 
employer is treated separately if each is acting independently 
of the other. But if the multiple employment is interrelated, 
the employee is treated as if he works for only one employer; 
and the employee's total work in both jobs is used to. 
determine eligibility for overtime compensation. 

The calculation of overtime hours is further described in 
the discussion of working time later in this chapter. 

The Regular Rate. The overtime compensation rate is com- 
puted from the "regular rate" at which the employee is paid. 
The regular rate is the hourly rate actually paid for the 
normal non-overtime workweek. If there is an employment 
contract specifying the number of working hours for which a 
fixed weekly or monthly compensation is paid, as would be the 
case in most instances with public employees, the regular rate 
is determined by dividing the total weekly compensation by the t 
number of working hours agreed upon in the contract. If an 

- 39 - 



• 



employment contract does not expressly specify such hours 
(although it is implied) , the regular rate of pay is 
calculated by dividing the employee's total compensation each 
week by the total hours worked. The employee is then entitled 
to be paid 1% times the derived regular rate for hours worked 
in excess of the maximum. 

Under the law, it makes no difference if the employee is 
pciid an hourly wage or a salary by the week, month or year, as 
long as he is otherwise covered by the law. When the employee 
is paid on a weekly, monthly, or yearly basis, the salary is 
simply reduced to its workweek equivalent to calculate the 
regular hourly rate. For example, if the employee is paid 
semi-monthly by contract the semi-monthly salary is multi- 
plied by 24 (the number of pay periods in a year) and divided 
by 52 (the number of weeks in a year) to determine the weekly 
wage. Once the weekly wage is calculated, the regular rate 
per hour is calculated as described above. 

The regular rate is deemed to include all compensation 
paid to the employee for employment, except the following: 
pay for vacations, holidays, illness and other periods when no 
work is performed; payment for travel and other similar 
expenses; contributions to retirement systems; and overtime 
payments, including overtime payments paid for work on 
weekends, holidays or other days of rest. 

2. Working Time 
Generally. In calculating the number of hours worked 

- 40 - 



each workweek by an employee to determine whether or not the 
employee is entitled to overtime pay, problems frequently 
arise in defining the extent of the hours worked, or working 
time. For example, are travel time and paid holidays to be 
counted as working time? In general, working time includes 
time spent in physical or mental exertion controlled or 
required by the employer and pursued primarily for the benefit 
of the employer; however, inactive time spent for the benefit 
of the employer can also be working time, as discussed below. 

Consent or Knowledge of Employer. To be counted as 
working time, an employee's activities must in general be 
carried on with the employer's knowledge and consent, 
expressed or implied. Thus, work not requested but "suffered 

xll 

or permitted" is working time when the employer has reason to I 
believe the employee is working, even where the employer has 
adopted a policy that overtime will not be allowed unless 
expressly approved by the employer in advance. However, 
working time does not include time spent by the employee 
remaining at work beyond the time called for without any 
knowledge of the employer.. 

3. Nonproductive Time 
Generally. Time spent by employees on vacation or other 
leave, and while waiting, traveling or sleeping, is nonproduc- 
tive but may be so related to the job of the employee that it 
must be counted as working time. The following paragraphs 
discuss such nonproductive time. 

- 41 - 



t 



Leave, Illness , Vacations and Holidays. Time spent on 
leaves ot absence for any reason, such as a vacation or a 
holiday and while away from work because of sickness, is not 
counted as working time under the overtime compensation law, 
with or without pay. (The employer could agree otherwise 
through the employment contract or a collective bargaining 
agreement.) Therefore, for example, if by the employment 
contract or by law an employee is entitled to a paid day off 
for Washington's Birthday, the hours off work for that day are 
not counted as working time, If, however, the employee elects 
to work on that day, with the employer's knowledge, the hours 
worked are counted as working time, but they are not overtime 
hours unless the maximum number of hours to be eligible for 
overtime pay has already been worked in that workweek. 

Attendance at Meetings and Seminars. Public employees 
frequently attend conferences, seminars, training programs, 
lectures and other meetings. Time spent by employees at such 
meetings is counted as working time unless attendance is not 
during regular working hours, attendance is voluntary, the 
meeting is not directly related to the job, and no productive 
work is performed by the employees during attendance. 

Meal Periods. Bona fide meal periods are not usually 
considered as working time. However, if the employee is 
required to perform duties for the employer, active or 
inactive, while eating, the meal period is then working time. 
A receptionist required to answer the telephone while eating 

-42 - 



is an example. 

( 

Rest Periods. Rest periods of short duration, running 
from five to 20 minutes, are common practice in today's 
working environment. They are counted as working time. 

Sleeping Time. In certain cases sleeping time must be 
counted as working time. For instance, if an employee is re- 
quired to be on duty (lookouts, firemen and dispatch operators 
are examples) even though the employee is permitted to sleep 
or engage in other personal activity when not busy, such time 
is considered to be working time. Additionally, if an 
employee is interrupted during sleep at home by a call to duty 
or for other job related business, such time is working time. 
In fact, if the interruptions are such that the employee _ xlc 
cannot get at least five hours sleep, the entire time is 
counted as working time. Where an employee is required to be 
on duty for more than 24 hours (firemen might be an example) , 
the employee and employer can agree to exclude sleeping time 
of not more than eight hours from hours worked, provided 
adequate sleeping facilities are furnished by the employer and 
the employee can enjoy an uninterrupted sleeping period. If 
there is no agreement (expressed or implied) in this instance, 
the eight hours of sleeping time are counted as hours worked. 

Employees Residing at Employers' Premises. Employees who 
reside at their employers' premises permanently or for 
extended periods are not considered to be working when they | 

- 43 - 



are not on duty or subject to call and have complete freedom 
to come and go as they please. 

Preparatory and Concluding Activities. An employee's 
"preliminary" or "postliminary" activities are not counted as 
working time, but "principal activities" are counted. Washing 
and changing into workclothes primarily for the convenience of 
the employee are examples of preliminary activities. Caring 
for tools, conferences with outgoing foremen, fueling vehicles 
and filling out time sheets are examples of principal 
activities which are counted as working time if those 
activities are an integral part of the job. 

Travel Time. Ordinary travel from home to work and 
return is not usually counted as working time. However, 
emergency travel to work, such as when an employee has gone 
home and is subsequently called back to work, is normally 
counted. In addition, travel to and from another place for 
the performance of work different than the employee's usual 
place of work is usually working time, even if outside regular 
working hours, The employer can regulate this activity by 
requiring employees to travel only during regular working 
hours . 

Waiting Time. Waiting time is sometimes considered to be 
working time, but it depends upon the circumstances of each 
case. If the employee is asked to wait for the employer's 
convenience, such as being on call on the employer's premises 

- 44 - 



or other work place or remaining so close that the employee 
cannot use the time effectively for his own purposes, he is^ 
considered to be working. However, if he is only required to 
leave word at his home or with the employer where he may be 
reached, he is not considered to be working. 

D. Employees Covered by the Wage and Hour Law 

Generally. The state minimum wage and overtime law 

covers, with certain exceptions, individuals who are employed 

by an employer. Employers are not defined, but clearly 

include all state and local governments and political 

subdivisions which are the subject of this handbook. The law 

lists several categories of employees who are exempt from 

coverage. In public employment, the primary exemption is f or 

l 
individuals employed "in a bona fide executive, administrative 

or professional capacity." This and other exemptions are 

discussed in part E of this chapter. In addition, independent 

contractors are exempt, since they are not employees (see 

discussion below and in Chapter 1). 

There is a possibility that some public employees are 
covered by the federal minimum wage and overtime law (FLSA) 
rather than by the state law. Reference should be made to the 
discussion at the beginning of this chapter for a description 
of this situation. 

Who Is An "Employee." Under the minimum wage and over- 
time law, the term "employee" is to be construed in itsf 

- 45 - 



broadest sense. As mentioned previously, any doubt as to 
whether or not an individual is an employee and is covered by 
the law must be resolved in favor of coverage. 

Since independent contractors are not employees, they are 
not covered by the law. (But, employees of independent 
contractors might be covered.) The term "independent contrac- 
tors" is defined and described in Chapter 1. For purposes of 
the minimum wage and overtime law, the term is to be given a 
narrow meaning, since the intent of the law is to extend 
coverage as far as possible. A claimed independent contractor 
exemption from the law's coverage will be closely scrutinized 
by the Montana Labor Standards Division, applying the tests 
set out in the discussion in Chapter 1. 

The law defines "employ" to mean to "suffer or permit" to 
work. This means that an individual otherwise covered by the 
law will be deemed to be an employee even if the work is not 
requested by the employer but is done with the expressed or 
implied consent or knowledge of the employer. However, if an 
employer has not expressly hired an individual, or allowed him 
to work under circumstances where an obligation to pay him 
will not be implied, there is no employer-employee 
relationship. 

E. Exemptions 
1 . Generally 
The minimum wage and overtime law provides for a number 
of specific exemptions, either from the minimum wage or 

- 46 - 



overtime compensation provisions, or both. These exemptions 
are based upon the nature of the duties performed by the 
individual employee, or upon the nature of the employer's 
business. Most of these exemptions will not arise in the case 
of public employees except in the rarest of circumstances, and 
will therefore not be enumerated here; only those that have 
application to employees of state and local governments will 
be discussed. 



Time Unit in Applying Exemptions. In determining the ap- 
plicability of an exemption, the workweek is the unit of time 
used. See part C of this chapter for a discussion of 
"workweek." An employee may be exempt in one workweek and not 
in the next; the employer has the burden of keeping track of 
exempt and nonexempt work as between workweeks. f~ 

2. Executive, Administrative and Professional Employees 
Generally. The minimum wage and overtime compensation 
provisions of the law do not apply to employees in a "bona 
fide executive, administrative, or professional capacity." 
This exemption is probably the most difficult to apply because 
of the meaning of those terms under different circumstances. 
The Commissioner of Labor and Industry has adopted an 
extensive set of regulations (patterned after the federal 
regulations) defining and describing these terms for guidance 
in applying the exemption. 

Factors Determining Exemption. An employee's actual' 

- 47 - 



activities determine whether or not he is employed in an 
exempt executive, administrative or professional capacity, not 
'whether he is well-paid or has a job description or title that 
implies he is employed in one of the three exempt categories. 
For example, calling a garbage truck driver a sanitary 
engineer will not qualify him for the professional exemption, 
and giving an employee an empty title of assistant manager 
will not qualify him for the executive exemption. What the 
employee actually does in practice is what counts. 

Executives. The regulations of the Commissioner define 
an executive as an employee: 

(a) whose primary duty consists of the management of the 
enterprise in which he is employed or of a 
customarily recognized department or subdivision 
thereof ; 

(b) who customarily and regularly directs the work of 
two or more employees ; 

(c) who has the authority to hire or fire other 
employees, or whose suggestions and recommendations 
as to the hiring or firing and as to the advancement 
and promotion or any other change of status of other 
employees will be given particular weight; 

(d) who customarily and regularly exercises 
discretionary power; 

(e) who does not devote more than 20% of his hours of 
work in the workweek to activities which are not 
directly and closely related to the above 

- 48 - 



activities; and, 
(f) who earns more than $150 per week, exclusive of - 
board, lodging or other facilities furnished by the 
employer and who meets the criteria of (a) through 
(e) above, or who earns more than $200 per week, 
exclusive of board, lodging or other facilities, and 
meets the criteria of (a) and (b) above. (This 
salary criteria does not apply to employees whose 
salary is set by statute, as is the case with some 
public employees.) 
All the above criteria must be met in order for the exemption 
to apply, since they are listed together in the regulations. 
These criteria are identical to those adopted under the 
federal FLSA, except as to the salary levels in (f). 

€ 

As the regulations state, management of the enterprise in 
which he is employed or of a subdivision thereof must be the 
primary duty of the employee. As a rule of thumb, an indivi- 
dual's primary duty is management if he spends more than 50% 
of his time in management. The following are examples of 
managerial duties: interviewing, selecting and training 
employees; directing their work; setting and adjusting their 
pay and hours of work; approving their productivity; handling 
their complaints; planning their work; and apportioning their 
work. 

The requirement of directing two or more employees is met 
if two full time employees are supervised, or several 
part-time employees whose hours worked are equivalent to two ( 

- 49 - 



full-time employees. 

tk The criteria that the employee exercise discretionary 

power is not met by the occasional exercise of discretionary 
power or by the exercise of mere discretion as to mechanics of 
performance. Discretion must be exercised on a day-to-day 
basis, and in matters of policy. 

Administrators . The exemptions for "executive" and 
"administrative" employees are sometimes confused. Each term 
has its own meaning under the law and regulations. In 
practice, however, if an employee meets the executive 
exemption, he will also meet the administrative exemption. 
However, the opposite is not true, since the administrative 
exemption is intended to be broader than the executive 
W exemption. 

Under the regulations, an administrator is an employee: 

(a) whose primary duty consists of the performance of 
office or nonmanual work directly related to 
management policies or general business operations 
of his employer; 

(b) who customarily and regularly exercises discretion 
and independent judgment; 

(c) who regularly and directly assists an employee 
employed in an executive or administrative capacity, 
or who performs under only general supervision work 
along specialized or technical lines requiring 

B special training, experience or knowledge, or who 

- 50 - 



executes special assignments and tasks under only 
general supervision; ^ 

(d) who does not devote more than 20% of his work hours 
to nonexempt work; and, 

(e) who receives not less than the salaries specified 
for the executive exemption, with the same 
limitations . 

Whether an employee's work meets the "primary duty" 
requirement for administrators is governed by the same 
principles as apply to the "primary duty" requirement for 
executives. The requirements that the work performed by an 
exempt administrative employee must be office work or 
nonmanual work restricts the exemption to "white-collar" 
employees, but "office" work can be either manual or nonmanual 
in nature. In this context, the term "manual" is used in its n 
regular sense, and means physical exertions as to the use of 
hands in contrast to mental exertions only. 

Administrative activities may include, for example, 
advising management, planning, negotiating, representing the 
employer, purchasing, and business research and control. 
Under federal regulations, which would likely be used to 
interpret the state law, administrative activities have a 
special meaning as to academic administrative employees. 
There, administrative activities denote administration 
relating to the academic operations and functions in a school. 

The extent to which discretion or independent judgment 
and the duty of making recommendations are involved is one of/ 

- 51 - 



ft 



the most important elements in determining whether an 
employee's work is administrative in character. It means the 
power to make independent choices, free from immediate 
direction or supervision, involving the setting of precedents 
and assisting in the determination of policies. It must be 
distinguished from the use of skill in applying techniques, 
procedures or specific standards, and decisions relating to 
matters of little consequence. 

There are three classes of employees described in 
particular in the regulations who may qualify for exemption as 
administrative employees: (1) executive and administrative 
assistants, generally found only in larger places of 
employment; (2) staff employees, such as personnel directors, 
special subject analysts and experts, and statisticians; and 
(3) those who perform special assignments, such as 
organization planners. 

Professionals. A professional, under the regulations, is 
an employee: 

(a) whose primary duty consists of the performance of 
work requiring knowledge of an advanced type in a 
field of science or learning; 

(b) whose work requires the consistent exercise of 
discretion and judgment in its performance; 

(c) whose work is predominantly intellectual and varied 
in character; 

(d) who does not devote more than 20% of his time to 
nonexempt work; and 

- 52 - 



( 



(e) who, with the exception of employees actually 
practicing law or medicine, is compensated at the 
same rates and under the same criteria as an 
executive (see previous discussion of the executive 
exemption) . 
The same principles of the primary duty requirement for 
executives and administrators also apply to professionals. 
Additionally, in determining whether an employee is an exempt 
professional, the work actually performed by the employee con- 
trols the determination — not whether the employee is trained 
as a professional. For example, a lawyer employed as a clerk 
is not a professional for purposes of the exemption from 
coverage for overtime compensation. 

Generally speaking, the professions which meet the 
requirements that the profession requires knowledge of an 
advanced type customarily acquired by a prolonged course of 
specialized instruction and study include law, medicine, 
nursing, accounting, actuarial computation, engineering, 
architecture, teaching, and various types of physical, 
chemical and biological sciences. Certain artistic 
professions may also be exempt, such as music, writing and 
graphic arts. 

Since there are many teachers in public employment in 
Montana, that category deserves special attention. A 
"teacher" is not defined in the state-adopted regulations; 
there are, however, federal regulations which provide 
guidance. The teacher-professional status may be satisfied if | 

- 53 - 



the employee's primary duty is teaching, tutoring, instructing 
| or lecturing in the activity of imparting knowledge. A 
teacher is engaged in teaching as a primary duty even if a 
considerable amount of time is also spent in extracurricular 
activities such as coaching, or acting as adviser in drama, 
forensics or journalism activities. Having a teaching 
certificate does not necessarily qualify an employee for 
exemption as a professional teacher; again, what is actually 
done on the job is what is important. 

Trainees as Executives, Administrators and Professionals. 

Employees who are training to become, but are not actually 

performing the duties of, an executive, administrative or 

professional employee, are not exempt from the overtime 

) compensation law. 

3. Agricultural Employees 
Generally. Special minimum wage provisions apply to 
"farm workers" under the state minimum wage law; farm workers 
are exempt entirely from the overtime compensation law. Since 
there are some farm workers in public employment, these spe- 
cial provisions are discussed briefly below. 

Farm Worker Defined. A "farm worker" is any person 

employed to do any service performed on a farm or ranch. The 

Montana Supreme Court has held that this definition requires 

that the work must actually be done at the farm or ranch, and 

T not somewhere else although still for the farm or ranch. 

- 54 - 



Minimum Wages of Farm Workers. If a farm worker is 
employed for a calendar year which includes periods requiring 
working hours in excess of eight hours per day, and other 
seasonal periods requiring working hours substantially less 
than eight hours per day, the employer may elect to compensate 
the employee farm worker under two different options: (1) pay 
a fixed rate of compensation during the term of employment 
that works out to the minimum wage (the employer must keep 
records of the total number of hours worked by the farm 
worker) ; or, (2) pay a minimum monthly wage of $635 per month. 

4. Apprentices and Learners 
Generally. Apprentices and learners can be exempted from 
both the minimum wage and overtime compensation requirements 
of the law for a period not to exceed 30 days of their / 
employment if approval has been obtained from the Montana 
Commissioner of Labor and Industry in the form of a "learner 
certificate." In addition, learners under the age of 18 who 
are employed as farm workers (see definition in part E above) 
are exempt for a period not to exceed 180 days, provided they 
are paid 50% of the minimum wage; no learner certificate is 
necessary to qualify for this exemption. 

Learner Defined. Under the regulations a "learner" is a 
worker whose total experience in an authorized learner 
occupation within the last three years is less than the period 
of time allowed as a learning period for that occupation 
according to the learner certificate issued by the v 

- 55 - 



Commissioner of Labor and Industry. 

I 

Learner Certificate — Appendix C. The employer must 
apply for and receive a learner certificate before a learner 
is exempt under the first learner exemption discussed above. 
Application is made to the Department of Labor and Industry, 
Labor Standards Division, on a form provided by the Division. 
See Appendix C for an example of this form. A separate 
application is required for each learner. The employer is 
required to report certain information and to meet certain 
criteria before a certificate will be approved by the 
Commissioner. Learner certificates require, among other 
things, that the learner be paid at least 85% of the minimum 
wage, and are good for only 30 days. 

5. Handicapped Employees 
Generally. Handicapped workers engaged in work which is 
incidental to training or evaluation programs, or whose 
earning capacity is so severely impaired that they are unable 
to engage in competitive employment, are also exempt from the 
minimum wage and overtime law. Although the statutes do not 
provide for certificates of approval in this case, the regula- 
tions of the Commissioner require that a special "certificate 
of handicapped workers" must be obtained. 

Handicapped Worker Defined. A handicapped worker is an 
individual whose earning capacity for the work he is to 
perform is impaired by age, physical or mental deficiency, or 

-56 - 



injury. A "handicapped trainee" is a handicapped worker who 
is receiving or is scheduled to receive on-the-job training 
under a vocational rehabilitation program. 

Handicapped Worker Certificates, Applications for a 
handicapped worker certificate must be approved by either the 
Montana Department of Social and Rehabilitation Services, by 
the state institution caring for the handicapped person, or by 
the Commissioner of Labor and Industry. 

6. Miscellaneous Exemptions. 
Generally. Other exemptions from the minimum wage and 
overtime compensation law which may be applicable to public 
employees are discussed briefly below. 

Student Learner. Students participating in a 
distributive education program established under the auspices 
of an accredited educational agency are exempt. Such students 
are called "student learners." A "student learner" is an 
individual who is attending an accredited school, college or 
university and is employed on a part-time basis, pursuant to a 
bona fide vocational program authorized and approved by the 
Montana State Office of the Superintendent of Public 
Instruction. A special student-learner certificate must be 
obtained from the Montana Department of Labor and Industry to 
qualify for this exemption. 

Employees of Sheriffs' Departments, Municipal and County 

- 57 - 



I 



* 



Governments / Health Care Facilities; Firefighters. A special 
overtime pay exemption was added to the law in 1981 for 
employees (including the sheriff and undersherif f s) of a 
sheriff's department who are working under an established work 
period in lieu of a workweek. A separate law authorizes a 
sheriff's department to establish a work period other than a 
workweek for determining when an employee may be paid 
overtime. In 1983/ additional overtime pay exemptions were 
added for f iref ighters , municipal and county employees, and 
employees of hospitals and other establishments primarily 
engaged in the care of the sick, disabled, aged, or mentally 
ill, where the employees have consented to different work 
periods by collective bargaining or by mutual agreement with 
the employer. Even with such agreements, however, municipal 
and county employees must still be paid overtime pay at one 
and one-half times the hourly wage rate for employment in 
excess of forty hours in a seven-day, forty-hour work period; 
and health care facility employees must be paid overtime pay 
at one and one-half times the hourly wage rate for employment 
in excess of eight hours per day or eighty hours in a 
fourteen-day period. 

F. Record Keeping Requirements Under Minimum 
Wage and Hour Laws 

1 . Generally 

The Commissioner of Labor and Industry has adopted 

regulations requiring that employers maintain certain records 

to ensure compliance with the minimum wage and overtime 

- 58 - 



compensation law in Montana. The following describes the 
requirements of those regulations. | 

2. General Requirements 
Form of Records. The regulations do not require that re- 
cords be kept in any particular form; that is left to the em- 
ployer. However, all employers who are covered by the minimum 
wage and overtime compensation laws, including public 
employers, must maintain records containing the information 
and data required by the regulations discussed below. 

Payroll Records. Employers must maintain and preserve 
payroll or other records containing the following information 
and data for each employee covered by the minimum wage and 
overtime compensation laws: 

(a) Name in full, and on the same record, the employee's 
identifying symbol or number if used in place of the 
employee's name on any time, work or payroll 
records. The name must be the same as that used for 
Social Security record purposes; 

(b) Home address, including zip code; 

(c) Date of birth; 

(d) Sex and occupation in which employed. The sex may 
be indicated by use of the prefixes Mr., Mrs., or 
Miss ; 

(e) Time of day and day of week on which the employee's 
workweek begins. If the employee is part of a work 
force or is employed by an employer all of whose 

- 59 - 



I 



workers have a workweek beginning on the same time 
> on the same day, a single notation of the time of 

the day and beginning day of the workweek for the 
whole work force will suffice; 

(f) Regular hourly rate of pay, and length of pay 
period; 

(g) Hours worked each workday, and total hours worked 
each workweek; 

(h) Total daily or weekly straight-time earnings or 

wages ; 
(i) Total weekly overtime compensation; 
(j) Total additions to and deductions from wages paid 

each pay period, and the dates, amounts and nature 

of the items which make up the total additions and 
7 deductions; 

(k) Total wages paid each pay period; 

(1) Date of payment and the pay period covered by 

payment. 

Payroll Records of Bona Fide Executive, Administrative 
and Professional Employees. For employees employed in a bona 
fide executive, administrative or professional capacity (see 
part E of this chapter) , the employer must keep all the 
records listed above, except those listed in (f) through (i); 
the employer must also keep records showing the basis on which 
wages are paid (such as $500/month, $20, 000/year , etc.). If 
there is some doubt whether or not a particular employee is 
'employed in a bona fide executive, administrative or pro- 

- 60 - 



fessional capacity, the employer should keep all the records 
listed in (f) through (i) as well. / 

Preservation of Records; Inspection. All payroll records 
required to be kept as listed above must be preserved for at 
least three years; the Labor Standards Division recommends 
that they be kept for at least eight years. In addition, 
collective bargaining agreements, individual contracts, basic 
employment and earning records, wage rate tables, worktime 
schedules and other similar records must be preserved for 
three years. These records must be kept at the place of 
employment or at a central record keeping office, and made 
accessible for inspection by the Labor Standards Division. 

Records of Board, Lodging or Other Facilities. Employers f 
who make deductions from wages for board, lodging or other 
facilities (see the discussion of allowed deductions for 
board, lodging or other facilities in part B of this chapter) 
must maintain and preserve records substantiating the cost to 
the employer of furnishing each class of facility. If meals 
are furnished, detailed records must be kept showing the type 
of meals, cost of meals, dates meals were furnished, total 
cost to each employee for the meals furnished each workweek, 
and the signature of the employee indicacing the meal was 
actually consumed by the employee. 

Records of Learners, Apprentices, Student Learners and 
Handicapped Workers. In addition to the record keeping 

- 61 - 



requirements discussed above, a symbol or letter must also be 
placed before the names on the payroll or pay records 
indicating that the employee is employed as a learner, 
apprentice, student or handicapped worker in those cases where 
the employee is certified as such by the appropriate agency 
(see discussion under parts E.2 through E.6 of this chapter). 

G. Prevailing Wage Requirements 
1 . Generally 
Besides the minimum wage and overtime compensation laws 
discussed in parts B through F of this chapter, other federal 
and state laws require the payment of a "prevailing wage" and 
overtime to certain employees working for contractors or 
subcontractors on public works projects. Although the federal 
prevailing wage law itself (Davis-Bacon Act) applies to only 
federal public buildings or public works projects, its 
requirements are frequently applied to public buildings or 
works projects of state or local government where federal 
funding or funding guarantees are involved under the so-called 
"related acts." And, even though employees covered by the 
prevailing wage requirements are not employees of the state 
agency or local government involved but are employees of a 
private contractor, the state agency or local government has 
certain obligations to meet to ensure that the prevailing wage 
is paid. This section discusses the prevailing wage 
requirements as they relate to public employers in Montana. 

2. Federal Prevailing Wage Law 
- 62 - 



Davis-Bacon Act — Appendix D. The Davis-Bacon Act, en- 
acted in 1931, applies to most federally-funded projects in* 
excess of $2,000 for the construction, alteration and/or re- 
pair, including painting or decorating, of public buildings or 
public works, and requires that contractors or subcontractors 
performing on a covered contract pay their laborers and 
mechanics on the site of work the wage rates and fringe bene- 
fits determined by the Secretary of Labor to be prevailing for 
corresponding classes of laborers or mechanics engaged in 
similar work in the locality. 

Nearly 60 other laws containing Davis-Bacon labor 
standards requirements for federally assisted construction 
have been passed over the years. A list of these federal acts 
which incorporate the Davis-Bacon Act by reference is included^ 
in Appendix D. The purpose of these laws is to preclude the 
purchasing power of the federal government from depressing 
local wage conditions through the competitive bidding process 
on federally-funded or assisted construction projects. 

Prevailing Wage Determination Under Davis-Bacon. The 
determination of prevailing wages is made in accordance with 
regulations of the U.S. Department of Labor. Under the cur- 
rent regulations, the prevailing wage rate is determined by 
ascertaining the rates of wages paid to the various classes of 
laborers or mechanics engaged in similar work in the various 
types of construction (e.g. building, residential, heavy and 
highway) in the area in which the work is to be performed. If 

- 63 - 



the majority of workers in a specific craft and construction 
9 type are being paid the same wage, then that wage rate becomes 
the prevailing wage rate. If a majority of workers are not 
being paid the same rate, then the rate paid to the largest 
number of workers is deemed to be prevailing, provided that at 
least 30 percent of those workers receive the rate. If less 
than 30 percent of the workers is paid the same rate, then a 
weighted average is computed for all of the workers by adding 
all rates and dividing by the number of workers. The result 
of that formula becomes the prevailing wage. 

The "rate of wages paid" includes, in addition to the 
basic hourly rate, "bona fide" fringe benefits when such 

% payments are made. Bona fide fringe benefits may include 
) 

contributions for medical care, pensions, certain insurance 
coverage, vacation and holiday pay and other like benefits, 
but only where the contractor is not otherwise required to 
furnish such benefits by law, such as workers' compensation. 
A contractor may discharge his obligations for payment of 
wages and fringes by paying in cash, making contributions or 
incurring costs for "bona fide" fringe benefits, or by a 
combination of the two methods. 

The "area where the work is to be performed" refers to 

the city, town or other governmental subdivision of the state 

in which the work is to be performed. The goal is to protect 

local wage rates. In practice, the Department of Labor gener- 

'"ally issues wage determinations for the county in which the 



- 64 



work is to be performed. 

Laborers and Mechanics Under Davis-Bacon. "Laborers ana 
mechanics" are workers performing manual or physical duties 
rather than mental or managerial ones. Under the Davis-Bacon 
regulations, a worker class ified as an apprentice or trainee 
may be paid less than the prevailing rate on a covered project 
only if he/she is enrolled in a bona fide apprenticeship or 
trainee program that is registered with the Apprenticeship 
Bureau of the Montana Department of Labor and Industry or with 
the Federal Bureau of Apprenticeship and Training of the U.S. 
Department of Labor. Otherwise, they must receive the appli- 
cable wage rate for the classification of work performed on 
covered Davis-Bacon projects. Bona fide executive, 
administrative and professional employees are not subject to>- 
the Act's provisions. 

Laborers and mechanics employed directly upon the "site 
of the work" are covered by Davis-Bacon. However, the site of 
work is not limited to the building itself and the grounds on 
which it stands. Fabrication plants, batch plants, barrow 
pits, job headquarters, tool yards, quarries and so forth are 
part of the site if they are so close to the actual construc- 
tion site that it is reasonable to include them, and provided 
they are used exclusively or nearly so for the performance of 
the contract. 



Construction Projects Covered by Davis-Bacon. Under pro- 
visions of the related acts noted above, Davis-Bacon pre- 



- 65 



^ vailing wage requirements may apply to non-federal construc- 
tion projects in which the federal government is only in- 
directly involved. The Federal Aid Highway Act and the 
National Housing Act are examples of the nearly sixty related 
statutes (see Appendix D for a list) . Because of these laws 
which by reference incorporate the requirement to apply 
Davis-Bacon prevailing wages f it is not necessary for the 
federal government to be undertaking construction which will 
be used by the federal government itself; some highways, 
airports, and water pollution control facilities of state or 
local government, for example, are covered. Nor is it 
necessary that the federal government pay for the construction 
it might be only guaranteeing commercial bank loans. 

A Today, it can be assumed that most bid contracts involving 
building, altering or repairing in which the federal 
government has an interest through ownership, ownership 
participation, fund guaranty, or funding through a federal 
grant or assistance program, will probably be covered by 
Davis-Bacon requirements. 

Overtime Pay Requirements. The Contract Work Hours and 
Safety Standards Act provides that laborers and mechanics, 
including watchmen or guards, working on federal or federally 
funded construction contracts in excess of eight hours daily 
or 40 hours weekly must be paid overtime compensation at a 
rate of not less than one and one-half times their basic 

i 



hourly rate of pay 



66 



Effect on State and Local Governments. Generally, state 
and local governments and political subdivisions carrying out / 
a construction project which involves the federal government 
are required to ensure only that the advertisement for bids 
for such construction contain the federal prevailing wage 
decision that will apply, and that the contract contain 
certain contract clauses provided in Department of Labor 
regulations. These clauses, among other things, provide that 
the contractor will pay prevailing wages, will pay wages not 
less often than once a week, will submit weekly payrolls to 
the agency and post the prevailing wage rates required to be 
paid at the work site. 

In addition, if the contract is in excess of $25,000 the 
contractor will be required to obtain a bond guaranteeing the -. 
payment of prevailing wages (this requirement is the result of 
another federal law, the Miller Act) . 

In each case, the state or local government or political 
subdivision about to embark on a construction project should 
always check with the appropriate federal agency involved in 
the project to obtain particulars pertaining to its obliga- 
tions. In most cases, the federal agency will provide these 
requirements in written form with other contract materials 
concerning the project. 

3. State Prevailing Wage Law 
State "Little Davis Bacon Act;" Conflicts with Federal 
Law. There is also a Montana state law requiring the payment* 



67 - 



it of prevailing wages (the state prevailing wage law is called 
the "Little Davis-Bacon Act"). It requires that in any con- 
tract let for state, county, municipal, school, or heavy high- 
way construction, services, repair or maintenance work, a pro- 
vision must be inserted in the bid specifications and the 
contract requiring the contractor to pay the standard pre- 
vailing rate of wages, and what those rates are. (This same 
law requires the contractor to give preference to the employ- 
ment of Montana residents -- see part B.3 of Chapter 2.) By 
its own terms, the state law does not apply in those instances 
where the prevailing wage is determined pursuant to federal 
law as described above. 

B Prevailing Wage Determination Under State Law. Prevailing 
wages under the state law are determined and set by the Com- 
missioner of Labor and Industry in much the same manner as 
under the federal law. Wages are determined by locality, 
county or groups of counties, using existing collective bar- 
gaining agreements and other wage-survey information, includ- 
ing the federal Davis-Bacon rates. However, the prevailing 
wage set by the Commissioner cannot be greater than the wage 
rate negotiated under such collective bargaining agreements. 
As under the federal law, fringe benefits for health and wel- 
fare, pension contributions and travel allowances may be in- 
cluded in the wage rate if they are also determined to be 
prevailing in the area in question. 



- 68 - 



Employees Covered by State Law. The state law is inter- 
preted by the Montana Department of Labor and Industry to / 
apply to all laborers, mechanics and other workers involved in 
the construction, repair or maintenance of all state, county, 
municipal and school work; it does not apply to engineering, 
superintendence, management and office or clerical work. 

Projects Covered by State Law. The state prevailing wage 
law is broader in scope than the federal law as far as its 
coverage of construction projects is concerned. It not only 
covers construction, repair and maintenance contracts for 
buildings, grounds, highways and other property owned by state 
and local governments, it also covers services provided to 
state and local governments. The term "services" is not 
defined. Engineering, superintendence, management, and office f 
or clerical work is expressly exempted. 

Public Contracting Agencies Covered by State Law. The 
statute applies to contracts awarded only by state, county and 
municipal governments and by school districts. The Department 
interprets this to mean that it also applies to political sub- 
divisions, such as conservation districts, irrigation dis- 
tricts, hospital districts, etc. 



Other Requirements. The state prevailing wage law re- 
quires contractors to post a statement of the prevailing wages 
to be paid employees on the site or work area, as is also 
required by the federal law. In addition, the public body 



( 



- 69 - 



letting the contract is required to withhold at least $1,000 
of the contract price until termination of the contract to 
guarantee that employees will be paid the prevailing wage. 
There is also a requirement that the legal advisor to the 
public body approve the contract in writing before it is 
signed by the appropriate contracting public officer. Final- 
ly, if the contract is for more than $50,000, a notice of ac- 
ceptance of the bid and the completion date of the project 
must be sent by the public body involved to the Montana 
Department of Labor and Industry. 

Penalties for Non-compliance. Failure of the contractor 
to pay the prevailing wage results in forfeiting to the 
contracting agency $25 a day for each worker underpaid. This 
amount comes out of the $1,000 withheld as discussed above. 
If the amount withheld is insufficient to cover the 
forfeiture, the Commissioner of Labor and Industry can sue the 
contractor for forfeitures due and other penalties as well. 

An amendment was made to the law in 1981 which provides 
that if the prevailing wage rates are not included in a public 
works contract, the contractor is relieved from paying the 
prevailing wage. If that happens, then the public contracting 
agency must pay the prevailing wage. 

H. Other Wage Protection Laws 
1 . Generally 
The salary and wages of many public employees in Montana 

- 70 - 



are set by statute. Some of these statutes set minimum wages, 
others set a mandatory level, and still others establish f 
overtime rates. How wages are to be paid is also governed by 
several laws, under both the minimum wage and overtime 
compensation laws and special statutes. Additionally, special 
wage protection is accorded to restaurant employees, including 
employees in state-operated restaurants. The wages of 
employees working for contractors are protected under 
contractor requirements. 

2. Special Wage Level Laws 
The salaries of many public officers and employees are 
set by statute. In instances where the level of salaries and 
wages set by a special statute conflicts with the general 
state minimum wage and overtime compensation law, the Attorney 
General has ruled that the special statute is controlling. 

3. Wage Protection of Restaurant Employees 
Generally. Employees in restaurants are given wage 
protection through bonding. Since the state and local 
governments operate several restaurants through lessees or 
contractors, this law deserves mention. Further, these 
restaurants may be subject to the FLSA if gross annual sales 
exceed $300,000. 

Bonding Requirements. With certain specified exemptions, 
anyone who operates a restaurant business (bar and tavern 
businesses are also covered) must file a bend equal to at 



71 - 



least twice the amount of the projected semi-monthly payroll 
A with the Montana Department of Labor and Industry. It is 
unlawful for the business to operate without the bond being 
filed; in fact, it can be closed down for failure to comply 
with this bonding requirement. Therefore, it is important for 
the public body involved to ensure that this bonding 
requirement is met. 

4. Contractor's Bond 
A contractor engaged in the construction business, except 
a resident contractor with a net worth of more than $50,000, 
must furnish a surety bond in an amount equal to the 
contractor's average monthly payroll as estimated by the 
Montana Department of Labor and Industry. The bond must be 
^ filed with the Department within one week of the contract or 
the commencement of work, whichever comes first. The public 
body for whom a contractor is about to perform construction 
work should ensure that the bond is filed, since it will be 
liable for wages and fringe benefits not paid if the bond is 
not filed. 

5. Wage Payment 
Payment of Wages Generally. All employers in Montana are 
required by law to pay their employees in lawful money of the 
United States or bank checks convertible into cash on demand; 
scrip, tokens, credit cards, coupons and kickbacks are prohi- 
bited. Wages must be paid within 10 days after they are due 
and payable, except to professional, supervisory or technical 



- 72 - 



employees who by custom receive their wages at least once 
monthly. 



Deductions . Employers may make reasonable deductions for 
board, room and other incidentals supplied by them, and for 
other deductions provided by law, such as for pension plans, 
taxation and health insurance. Deductions for board, room and 
other incidentals cannot exceed 40% of the gross wages, and 
only the actual cost to the employer of the board, room and 
other incidentals can be deducted. When payments are made to 
employees the employer must give the employees an itemized 
statement listing the deductions and their amount. 

Payment When Employee Terminated. If an employee is +- x 
separated from employment for any reason, he must be paid all 
unpaid wages within three days after separation, except for 
employees of the state and its political subdivisions who must 
be paid within 15 days or on the next regular payday, 
whichever comes first. 

Enforcement. The general wage payment statutes described 
above are enforced through the Montana Department of Labor and 
Industry. The Department investigates complaints of 
violations and can institute court actions to collect wages 
due. Individual, employees can also bring court actions to 
collect wages due; they are entitled to attorney fees if they 
win. I 

- 73 - 



Payment to State Employees. Pay dates for state 
W employees must be the same for all employees of each state 
agency employed in the same geographic area. Pay checks 
(warrants) to state employees must be mailed or distributed 
within 10 business days following the close of each payroll 
period. 



74 - 



Si? 



Soi 



■' 



'" 



I 



9 



CHAPTER 4. HOURS OF EMPLOYMENT 



A. Generally 75 

B. A Day's Work 7 5 

1 . Montana Constitution 75 

The 8-Hour Day — Generally 7 5 

Interpretation 76 

2. State Statutes 77 

The 8-Hour Day — Public Employees .... 77 

Restaurant Employees 78 

Telephone Operators 78 

C. The Workweek 78 

Overtime Compensation 78 

Firefighters 78 

Restaurant Employees 79 

D. Effect on Employment 79 



A. Generally 
Hours of employment refers to the number of hours an 
employee is required or permitted to work for various 
purposes. Some laws actually limit the maximum number of 
hours an employee may be required to work in a certain period. 
Other laws establish work hours for various types of 
employment. In addition, the minimum wage and overtime 
compensation and other laws dictate how wages and overtime 
compensation are to be computed and paid on the basis of a 
certain number of hours worked. This chapter describes the 
requirements . 

B. A Day's Work 

1 . Montana Constitution 

The 8-Hour Day — Generally. Article XII, Section 2 of 

the 1972 Montana Constitution provides: "A maximum period of 

eight hours is a regular day's work in all industries and 

- 75 - 



employment except agriculture and stock raising. The 
legislature may change this maximum period to provide for the 
general welfare." The old (1889) Montana Constitution 
contained a similar provision, except that the Legislature was 
permitted only to reduce the maximum, not to raise it. 

Interpretation . The eight-hour day provisions of the 
Montana Constitution have been interpreted and applied 
somewhat inconsistently in the past, leading to confusion on 
the part of many public as well as private employers. Today, 
however, the Montana Supreme Court and the Attorney General 
have basically settled the problem. 

At one time, it was held that the Constitution's 
eight-hour day provision flatly prohibited any employee from 
working more than eight hours per day. In 1973, however, in a p 
case involving the state institution at Boulder, the Montana 
Supreme Court by implication held that the federal minimum 
wage and overtime compensation law (the federal Fair Labor 
Standards Act), by providing for overtime compensation, 
authorized employees to work more than eight hours per day. 
The Attorney General subsequently ruled that the state 
overtime compensation law, which now applies to state and 
local government (see Chapter 3) , allows an employer to 
schedule work days for more than eight hours with the consent 
of the employee. The result of these rulings is that 
employees as a general rule may work for more than eight hours 
in a day if they wish, but an employer cannot require it. 
However, there are exceptions to this rule, as described later 

- 76 - 



in this chapter. 



2. State Statutes 
The 8-Hour Day — Public Employees. There is also a 
state statute similar to the Constitutional provision, pro- 
viding that a period of eight hours constitutes a day's work 
for state, county and municipal government employees and 
employees of first-class school districts, and for employees 
of all contractors of those public bodies awarded contracts by 
bidding. The statute does not apply in the event of an 
emergency when life or property is in imminent danger. In 
addition, the statute provides that employees of municipal and 
county governments may agree to other hours of work per day 
through collective bargaining or by mutual agreement with the 
employer. Janitors in courthouses of sixth- and seventh-class 
counties are expressly excluded. As interpreted by the same 
Montana Supreme Court case and Attorney General's opinions 
discussed above, the effect of this statute is to prohibit 
public employers from requiring covered employees to work more 
than eight hours per day without the employee's consent. The 
eight-hour day constitutional and statutory provisions do not 
require time and one-half pay for work in excess of eight 
hours in any workday. (But the minimum wage and overtime 
compensation law requires time and one-half pay for overtime 
in excess of 40 hours in a workweek, and the employer may also 
agree to pay time and one-half for more than eight hours in a 
workday. ) 



77 



Restaurant Employees. A period of eight hours 
constitutes a day's work for restaurant, cafe and lunch 4 
counter employees, including employees in restaurants operated 
by public bodies. The hours of work of these employees must 
be arranged so that they are not on duty for more than a total 
of eight hours in any 12-hour period, and they must have at 
least 12 consecutive hours off duty each day. There are 
exceptions when another employee is sick or when other 
emergencies arise. 

Telephone Operators. Telephone operators may not be em- 
ployed for more than nine hours in a 24-hour period in cities 
or towns of more than 3,000 inhabitants. 

C. The Workweek • 

Overtime Compensation. Under state law, employees 
covered by the overtime compensation law must be paid 1^ times 
their regular hourly rate for hours worked in excess of 40 
hours in any workweek. For a thorough discussion of what 
employees are covered and how the overtime compensation is to 
be computed, see Chapter 3. 



Firefighters . For firefighters in cities of the first 
and second class, a workweek is a maximum of 40 hours during a 
five-day week. Under this law such cities may not schedule 
their firefighters to work more than 40 hours during a 
five-day week, without the consent of the firefighters 
involved. Another law provides that firefighters may not be 



*• 



78 - 



required to work more than eight hours in a 24-hour period, 
except in emergencies; the Attorney General has held that this 
^f prohibition may not be waived by the firefighters involved. 

Restaurant Employees. Besides having legal protection as 
to working hours per day, restaurant employees also have 
weekly protection. By statute they cannot be required to work 
more than 4 8 hours in a week. 

D. Effect on Employment 
As discussed previously in this chapter, the 
constitutional and statutory provisions in Montana governing 
hours worked per day or week generally have the legal effect 
of protecting employees from being required to work more than 
a certain number of hours. That is not to say that an 
▼ employee, or a group of employees through a collective 
bargaining agreement, could not agree to work more than the 
legal maximums. This practice is quite common. 

Whether or not the expressed consent of the employee is 
necessary before he or she can work beyond the legal maximum 
is a question that has not been decided. It would seem 
reasonable to interpret the law as not requiring expressed 
consent, but only acquiesence on the part of the employee. In 
other words, the employee has the right to refuse to work in 
excess of the legal maximums; if the employee does not so 
refuse, it can be presumed the employee consented. However, 
it is advisable for the employer always to obtain the 
™ expressed consent of the employee in these cases, since the 

- 79 - 



employee could claim that he was coerced to work more than i 
eight hours in a work day, with the employer therefore 
violating the eight-hour-day laws. 



t 



CD -< > 

m m "5 
Z m ™ 

c/> 



< 



$ 



* 



CHAPTER 5. EMPLOYEE RIGHTS AND BENEFITS 



Generally 83 

Leave 83 

1 . Sick Leave 83 

Generally 83 

Employees Covered 83 

Sick Leave Defined 84 

Sick Leave Credits 84 

Part-time, Temporary and Seasonal 

Employees 85 

Payment for Termination; Transfer .... 85 

Abuse of Sick Leave 86 

Charging Sickness to Annual Leave .... 86 
Employer Personnel Sick Leave Policies; 

Employment Agreements 86 

2. Annual Leave 87 

Generally 87 

Employees Covered 87 

Annual Leave Credits 87 

Part-time, Temporary and Seasonal 

Employees 88 

Payout for Termination; Transfer 88 

Determination of Annual Leave Dates ... 89 
Personnel Policies and Employment 

Agreements 89 

3. Holidays 89 

Generally 89 

Holidays for Public Employees Other 

Than School Employees 89 

Holidays for School Employees 91 

Work During Holidays 91 

Holidays Falling During Annual Leave ... 91 

4. Military Leave 92 

Leave of Absence of Public Employees 

Attending Training Camp 92 

Military Leave While on Active Duty — 

Annual Leave Credits 92 

5. Maternity Leave . . 93 

Generally 93 

Unlawful Acts of Employer 93 

Leave of Absence 9 3 

Reinstatement 94 

Enforcement 94 

6. Jury and Witness Duty 94 

7. Employees Elected or Appointed to Public 

Office 95 

Group Insurance Coverage 95 

Generally 95 

Group Insurance for Public Employees 95 

State Employees 96 

Contributions 96 

Individual Employee Coverage 96 

81 - 



D. Workers' Compensation Insurance 96 

Generally 96 ^ 

State Agencies 97 C 

Local Governments and Political 

Subdivisions 97 

Other Obligations of Employer 98 

E. Unemployment Insurance 98 

Generally 98 

Contributions 99 

Benefits 99 

Other Employer Obligations 99 

F. Retirement Systems 99 

Generally 99 

Systems in Effect; Members 100 

PERS — State Employees Covered 101 

PERS — Local Government and Political 

Subdivision Employees 102 

Contributions 103 

G. Social Security and Income Tax Withholding .... 103 

1. Social Security 103 

Generally 103 

2. Income Tax Withholding 103 

Generally 103 

H. Employee Retirement Income Security Act of ■> 

1974 (ERISA) 104 

Generally 104 

Effect of ERISA 105 

I. Occupational Health and Safety 106 

Generally 106 

Health and Safety Standards 107 

Enforcement 108 

J. Collective Bargaining 108 

Generally 108 

Organization of Public Employees 109 

Bargaining 109 

Collective Bargaining Agreements 109 

Unfair Labor Practices 110 

K. Political Activity 111 

1. Generally 111 

2. Federal Law 111 

Employees Covered 111 

Prohibited and Permitted Activities ... 112 

3. State Law 112 

Employees Covered 112 

Prohibited and Permitted Activities ... 113 

L. Personnel Policies and Procedures 114 W 

1. Generally 114 

- 82 - 



Authority to Adopt Personnel Policies . . 114 
Personnel Powers and Policies of the 

State Department of Administration ... 115 
| C % Effect of Personnel Policies; Recent 

" Court Decisions 117 

2. Grievance Procedures 119 

Generally 119 

Grievances of State Employees 119 

Grievances of Local Government 

Employees 120 

Grievance Procedures in Collective 

Bargaining Agreements 120 

Court Review of Administrative 

Grievance Procedure Decisions 121 



A. Generally 
By law and administrative policy, public employees are 
entitled to certain rights and benefits. Commonly called 
"fringe benefits," they include things like annual leave, paid 
holidays, insurance coverage, and grievance procedures. 
Fringe benefits of public employees are described in this 
chapter. Minimum wage and overtime compensation requirements, 
maximum hour entitlements, antidiscrimination laws, and rights 
of terminated employees, are described in other chapters. 

B. Leave 

1 . Sick Leave 

Generally. All public employees, with certain minor 

exceptions, are entitled to sick leave under Montana law. The 

amount of the leave is based upon a credit hour system, which 

in turn is based on length and type of service. 

Employees Covered. Only elected state, county, and city 

officials, school teachers, and persons hired as independent 

k, (Contractors or hired under personal service contracts are ex- 

- 83 - 



eluded from the sick leave benefits provided by state law. 

Under various court decisions and opinions of the StatJ 
Attorney General, it has been ruled that the law even covers 
employees of hospital districts and fire districts, since they 
are employees of political subdivisions of local government. 
In addition, it covers "non-teaching" employees of school 
districts, the University System, and vocational technical 
centers, since they are employees of political subdivisions of 
the state. 

The "school teacher" exemption has created the most prob- 
lems in applying the law. Teachers, whether employed by 
school districts, the University System, or other schools 
operated by agents (political subdivisions) of the state are 
entitled to sick leave as provided by personnel policies oj^ 
the employer, or by collective bargaining agreements. 
However, the Attorney General has ruled that benefits for 
teachers cannot be greater than those provided to employees 
covered by the law described above. 

Sick Leave Defined. By statute, "sick leave" is defined 
as a leave of absence with pay for a sickness suffered by an 
employee or his immediate family. 

Sick Leave Credits. Full-time public employees covered 
by the law earn credits for sick leave at the rate of 12 
working days each year of service, which is deemed to be equal 
to 2,080 hours. This means that employees earn sick leave atfl* 

- 84 - 



the rate of 96 hours per year, or approximately .37 hours per 
k ay of employment (.046 hours per hour). Overtime hours and 
hours worked beyond forty hours per week are not counted. 
Credits are accumulated from one year to the next, with no 
maximum. 

The credits are earned from the first day of employment, 
but employees are not entitled to take paid sick leave until 
they have been continuously employed for 90 days in the same 
jurisdiction (state, county, or city, or political 
subdivisions thereof) . Sick leave cannot be earned while on a 
leave-without-pay status. 

Part-time, Temporary, and Seasonal Employees. Part-time, 

^ emporary, and seasonal employees earn sick leave credits like 

anyone else, except credits are prorated to part-time 

employees. They must also work the qualifying 90-day period 

in order to take paid sick leave. 

Payment for Termination; Transfer. Employees who 

terminate employment for any reason are entitled to be paid a 
lump-sum payment equal to one-fourth of the pay attributed to 
the accumulated sick leave, based on the salary or wage of the 
employee at the time of termination. However, if an employee 
transfers to the employment of another agency in the same 
jurisdiction (as from one state agency to another), he is not 
entitled to be paid the lump-sum; instead, the new employing 
^ r gency assumes responsibility for the accrued sick leave 

- 85 - 



credits earned (this is only for sick leave credits earned 
after July 1, 1971). Once paid a lump-sum, all sick leave 
credits are lost, even if the employee goes back to work for 
the same employer. 



Abuse of Sick Leave. By law, "abuse" of sick leave is 
cause for dismissal and forfeiture of the lump-sum payment. 
However, the term "abuse" is not defined. 

Charging Sickness to Annual Leave, It is unlawful for a 
public employer to charge absence from employment because of 
sickness to annual leave (see B.2 below) rather than to sick 
leave, unless the employee consents. 

Employer Personnel Sick Leave Policies; Employment Agree- ^ 
ments . Each public employer is responsible for administering 
the sick leave provisions described above, and personnel 
policies are required to be adopted to do so. This is handled 
through the Department of Administration for state government, 
and the chief "administrative officer" of any county, city or 
political subdivision. Such policies can include provisions 
to prevent the abuse of sick leave. (See discussion later in 
this chapter on personnel policies.) Employment and 
collective bargaining agreements which include sick leave 
provisions can also be negotiated. However, the Attorney 
General and the courts have ruled that sick leave benefits 
provided by law (as well as annual leave benefits — see 
below) are mandatory, and not mirvimums . Therefore, personnel^ 

- 86 - 



policies and employment agreements cannot grant employees more 

Co 



benefits than they are entitled to by law; they can only 



define terms, provide for administration, and make other such 
determinations . 

2. Annual Leave 
Generally. Public employees earn annual leave credits in 
much the same manner as sick leave. The leave earned is based 
on length of service. 

Employees Covered. All public employees are covered by 
the annual leave law except for elected officials, independent 
contractors and teachers, as under the sick leave law. Annual 
leave for teachers is provided by administrative policy or 
k employment agreement. Elected officials can take annual leave 
whenever they want to, but they do not earn credits to be paid 
out when they vacate their elective positions. 

Annual Leave Credits. Annual leave credits for covered 
public employees are earned as follows: 

Year of Employment Working Days Credit Per Year 

1 day through 10 years 15 

10 years through 15 years 18 

15 years through 20 years 21 

20 years + 24 

For calculating annual leave credits, 2,080 hours equals one 
year, and credits are earned only at the end of each pay 
period. Annual leave can be accumulated to a total not to 

- 87 - 



h 



exceed twice the maximum number of days earned annually as of 
the end of the first pay period of the next calendar year, but" 
annual leave time in excess of the maximum is not forfeited by 
the employee if it is taken within 90 calendar days from the 
last day of the calendar year in which the excess was accrued. 

Annual leave credits are earned from the first day of em- 
ployment, but employees cannot take paid leave until they have 
been continuously employed for six calendar months. Annual 
leave cannot be earned while the employee is on a 
leave-without-pay status. 

Part-time, Temporary and Seasonal Employees. Part-time 
and seasonal employees also earn annual leave credits, except 
credits are prorated for part-time employees. Temporary m 
employees earn annual leave only if they are employed longer 
than six months or are transferred to a permanent position. 
The six-month qualifying rate also applies to these employees. 

Payout for Termination; Transfer. Assuming an employee 
has worked the six-month qualifying period, he is entitled to 
be paid for unused annual leave upon termination of employment 
at his current rate of pay. Termination must be for a "reason 
not reflecting discredit on himself." An employee may go on 
an annual leave status when leaving employment, rather than 
termination immediately and be paid a lump-sum, so as to 
accumulate more leave credits during the time he is on annual 
leave. Pay for unused vacation * on leaving employment is T 



8 - 



considered wages under Montana law and must be paid in a 

manner identical to other wages, 
ca 

I 

If an employee transfers to a new agency in the same 
jurisdiction, no cash payout is allowed. Instead, the new 
agency picks up liability for credits earned. 

Determination of Annual Leave Dates. The times when 
annual leave can be taken are determined by mutual agreement 
between the employer and employee. Such determination is 
often further governed by personnel policies or employment 
agreements. 

Personnel Policies and Employment Agreements. As in the 
case of sick leave, the public employer can adopt policies 
k governing annual leave, or enter into employment agreements 
regarding it. Again, however, those policies or agreements 
cannot conflict with or increase the benefits provided by law, 
since the benefits are considered to be mandatory and not 
min imums . 

3. Holidays 
Generally. Public employees are entitled to holidays 
enumerated by statute. There are different holidays for 
school purposes. 

Holidays for Public Employees Other Than School 

Employees. The list of legal holidays for public employees, 

| r other than school employees (whether teaching or 

- 89 - 



non-teaching), is as follows: 

(a) Each Sunday; 

(b) New Year's Day, January 1; 

(c) Lincoln's Birthday, February 12; 

(d) Washington's Birthday, the third Monday in February; 

(e) Memorial Day, the last Monday in May; 

(f) Independence Day, July 4; 

(g) Labor Day, the first Monday in September; 
(h) Columbus Day, the second Monday in October; 
(i) Veteran's Day, November 11; 

(j) Thanksgiving Day, the fourth Thursday in November; 

(k) Christmas Day, December 25; 

(1) State General Election Day. 
If any of these holidays (except Sunday) fall upon a Sunday, 
the following Monday is a holiday. fc 

Employees covered by the above are entitled to pay for 
such holidays (except Sunday) . If a full-time employee is 
scheduled for a day off on a day which is a legal holiday 
(except Sunday) , he is entitled to a day off with pay either 
on the day preceding the holiday, on another day following the 
holiday in the same pay period, or as agreed to between the 
employee and employer; temporary and seasonal employees are 
not entitled to the same substituted holidays, at least under 
the statute. Part-time employees receive pay for the holiday 
on a prorated basis under policies adopted by the employer 
(the Department of Administration in the case of state 
part-time employees) . ^ 



- 90 



Holidays for School Employees. School employees, whether 

Ccx 

\ eaching or nonteaching, are entitled to the following 
holidays : 

(a) New Year's Day, January 1; 

(b) Memorial Day, last Monday in May; 

(c) Independence Day, July 4 ; 

(d) Labor Day, first Monday in September; 

(e) Thanksgiving Day, fourth Thursday in November; 

(f) Christmas Day, December 25; 

(g) State and national election days when the school 
building is used as a polling place and holding 
school would interfere with the election process at 
the polling place. 

If these holidays fall on a Saturday or Sunday, the preceding 
' Friday or following Monday are not holidays. 

Work During Holidays. The Attorney General has ruled 
that the law doesn't forbid the public employer involved from 
requiring employees to work on holidays or substitute 
holidays. However, if an employee is required to work on a 
holiday, he must be either compensated for the lost holiday or 
given an opportunity to take a paid day off. 

Holidays Falling During Annual Leave. It has also been 
ruled by the Attorney General that if a holiday falls during 
an employee's annual leave, that day must be counted as a 

holiday, and not as annual leave. 

i ma 



- 91 - 



4. Military Leave 
Leave of Absence of Public Employees Attending Training* 
Camp. By state law, state, city and county employees who are 
members of the organized militia of the state (National Guard) 
or who are members of the organized or unorganized reserve 
corps or military forces of the United States, and who have 
been employed by the state, city or county for six months or 
more, must be given leave with pay for a period not to exceed 
15 working days in each calendar year to attend regular 
encampments, training courses and similar training programs of 
the organized militia or of the military forces of the United 
States. Such leave may not be charged against annual leave. 

This statute has been interpreted by the Attorney General 
to apply to political subdivisions of state and local^ 
government as well, including school districts. The Attorney 
General has also ruled that the law applies to employees who 
have fulfilled all mandatory military service and reserve 
obligations, but who have extended their military service; it 
does not apply to temporary employees (however, federal law 
requires that temporary employees who are in federal 
employment while at a training camp must be given leave 
without pay for a period not to exceed 15 days. 

Military Leave While on Active Duty — Annual Leave 
Credits . If a public employee is called to active duty or 
volunteers for active duty during a war involving the United 
States or in any other national emergency, his time while on ^ 

- 92 - 



I 



active duty must be counted as employment for purposes of 
calculating annual leave credits (see part B.2 above). 

5. Maternity Leave 
Generally. A maternity leave act was enacted in Montana 
in 1975. It applies to all employers, public and private. 

Unlawful Acts of Employer. The maternity leave law, 
among other things, makes it unlawful for an employer to: 

(a) Terminate a woman's employment because of her preg- 
nancy; 

(b) Refuse to grant a reasonable leave of absence for 
the pregnancy; 

(c) Deny medical insurance benefits for pregnancy if a 
medical insurance plan is in effect for other 
employees; 

(d) Require that an employee take a mandatory leave for 
an unreasonable length of time. 

Leave of Absence. Under the maternity leave law and 
current regulations of the Commissioner of Labor and Industry 
(the administration of the law will be transferred to the 
Human Rights Commission on July 1, 1983), a female employee 
has the right to take a reasonable leave of absence for 
pregnancy. For pay purposes, such leave must be treated like 
any other temporary disability or illness. The determination 
of what is a reasonable period is made by treating the 
maternity leave as any other leave for medical reasons. If 

- 93 - 



the employer requires maternity leave to be taken, the rea- 
sonableness of the length of time must be determined on a case^ 
by case basis, but the burden is on the employer to prove that 
a maternity leave for a longer period than that prescribed by 
the employee's doctor is reasonable. In no case can an 
employee be required to take leave without pay for a period 
longer than the period, certified by a doctor, in which the 
employee is unable to perform her duties. However, the 
employee and employer can agree to a longer period, either 
with or without pay. 

Reinstatement . An employee on maternity leave is 
entitled to return to her original job or to an equivalent 
position with equivalent pay and accumulated seniority, 
retirement, fringe benefits and other service credits. £ 

Enforcement, Enforcement of the maternity leave law is 
carried out through the Human Rights Commission, as of July 1 , 
1983. Formerly it was with the Montana Department of Labor 
and Industry. 

6. Jury and Witness Duty 
Public employees (other than teachers) who are summoned 
to jury duty or subpoenaed to serve as a witness may elect to 
receive their regular salary or take annual leave during jury 
time. If the employee elects not to take annual leave, 
however, all juror and witness fees and allowances (except for 
expenses and mileage) must be remitted to the employer. An* 

- 94 - 



employer may request the court to excuse an employee from jury 

^^duty if he is needed for the proper operation of the unit of 
government affected. 

7. Employees Elected or Appointed to Public Office 
Public employees (except teachers) who are elected or ap- 
pointed to a public office in the state, county or city are 
entitled to a leave of absence of up to 180 days while they 
are performing public service. They must return to work 
within 10 days following completion of the service. 

C. Group Insurance Coverage 
Generally. This part describes group insurance coverage 
available to public employees. Other forms of insurance, such 

^kis workers' compensation and employment compensation, are 
described later in this chapter. 

Group Insurance for Public Employees. Upon approval of a 
two-thirds vote of the officers and employees, each county, 
city, town and school district, and the Board of Regents, must 
enter into a group hospitalization, medical, health, long-term 
disability, accident and/or life insurance contract or plan 
for the benefit of its officers and employees and their 
dependents. It is not clear whether this voting procedure and 
mandatory coverage applies to political subdivisions of 
counties and cities as well, but judging by court decisions 
and opinions of the Attorney General in other similar 
^P situations, it probably does. It does not apply to political 

- 95 - 



% 



subdivisions of state government (such as conservation 
districts) , except for school districts. s 

State Employees. Group insurance coverage for state 
employees and elected officials is provided through the 
Department of Administration, either by contract or by 
alternative means, such as self-insurance. 



Contributions . Once an insurance contract or plan is 
adopted under the foregoing procedures, the public employer is 
obligated to contribute at least part of the cost of providing 
it to each employee who elects to be covered. In the case of 
state employees (other than members of collective bargaining 
units) the employer contribution is $80 per month after June 
30, 1982. For employees of school districts and loca] ▲ 
government, the employer contribution must be at least $10 per 
month. 

Individual Employee Coverage. An employee may elect not 
to be covered by any of the insurance plans provided through 
his public employer; instead, he may pay for separate coverage 
of his own choosing. In that case, however, the public 
employer is prohibited from contributing part of the cost. 

D. Workers' Compensation Insurance 
Generally. All public employees in Montana are required 
to be covered by workers' compensation insurance paid for by 
the employer. Coverage must also be provided for elected and^ n l 

- 96 - 



^^ppointed paid public officers. Even most independent 
contractors must be covered, and their employees. (See 
Chapter 1 for a definition and discussion of independent 
contractors). However, independent contractors can be 
excluded from coverage upon application to and approval by the 
Workers' Compensation Division. Job related injuries are 
compensated for by the insurance, and employees are then 
precluded from suing the employer for injuries. 

State Agencies. In the case of employees of state 
government, coverage must be provided under a plan called 
compensation plan No. 3, more commonly referred to as the 
state fund. Under the state fund, state agencies pay an 
^kinsurance premium which is a percentage of the agencies' 
payrolls set by the Division of Workers' Compensation. The 
Division maintains and operates the fund, and pays covered 
claims out of the fund. 

Local Governments and Political Subdivisions. Local 
governments and political subdivisions may elect to provide 
coverage under Plan No. 3 or under two other plans, one of 
which is to cover employees through a private insurance 
carrier, and the other to "self insure" (pay for workers' 
compensation claims directly from a reserve fund of the 
employer itself) . The choice of coverage must be approved by 
the Division. 



97 



Other Obligations of Employer. The Workers' Compensation 
Act and the rules adopted under it by the Division require em-°^ 
ployers to make certain reports to the Division, and to 
satisfy other obligations. For example, reports of accidents 
are required from the employer, and payroll reports from 
employers who have covered their employees by the state fund. 

An employer who contracts with an independent contractor 
to have work done which is a regular or recurrent part of the 
functions of the employer is liable for payment of benefits to 
the employees of the contractor if the contractor has not 
properly covered his employees. For this reason all employers 
should make sure their independent contractors are providing 
workers' compensation insurance for their employees. One 
effective way to do this is to require the contractor to 
provide such coverage in the written contract between the 
public employer and the independent contractor. 

The Montana Workers' Compensation Division should be con- 
sulted for information on these and any other requirements of 
the Workers' Compensation Act. 

E. Unemployment Insurance 
Generally. All public employers in Montana are required 
to provide unemployment insurance for their employees. Only 
elected public officials and certain students are exempt from 
coverage; all other public employees are covered. As in the 
case of Workers' Compensation Insurance, there is no obliga- 
tion on the employer to provide insurance coverage for ^^ 

- 98 - 



independent contractors. 

Contributions, Employers are required to pay "contribu- 
tions" to finance unemployment insurance. The payments are 
made to the Unemployment Insurance Division of state 
government, and are based upon the wages of the employee. The 
employment and benefit history of the employer (called 
"experience rating") also affect the amount of contributions 
required. Public employers may elect to become liable for 
benefits in lieu of contributions under certain conditions. 

Benefits. Unemployment compensation benefits are paid to 
employees separated from employment under certain specified 
criteria. For example, employees terminated for "misconduct" 
^are not entitled to benefits, nor are employees who have vol- 
untarily left work "without good cause." 

Other Employer Obligations. Employers are required to 
maintain certain records and make reports to the Unemployment 
Insurance Division. Interest and penalty charges are assessed 
for past-due contributions. 

The Montana Unemployment Insurance Division should be 
consulted for information regarding these and other 
requirements of the Unemployment Insurance Law. 

F. Retirement Systems 
^^ Generally. There are several retirement systems which 

- 99 - 



have been created by law in Montana and provide retirement 
benefits for public employees. All of these systems, with one 

1 

exception, allow only certain groups of public employees to w 
become members; the one exception is the Public Employees' 
Retirement System (PERS) . One way or the other, virtually all 
public employees in Montana have an opportunity to join a 
retirement system; it is required for most state government 
employees. 

Systems in Effect; Members. The following retirement 
systems are available for Montana public employees: 

1. Public Employees' Retirement System (PERS) ; 

2. Teachers' Retirement System; 

3. Judges' Retirement System; 

4. Highway Patrol Retirement System; 

5. Sheriffs' Retirement System; 

6. Statewide Police Retirement System; 

7. Local Police Retirement System; 

8. Firefighters' Retirement System; 

9. Volunteer Firefighters' Retirement System; 
10. Firefighters' Unified Retirement System. 

Since all of these systems are available to only a select 
group of public employees, with the exception of PERS, and are 
fairly well known to the employers of those groups, they do 
not need further discussion here. However, since the PERS is 
widespread and available to all public employees not otherwise 
covered, including employees of local governments and 
political subdivisions, it is briefly described below. 

- 100 - 



PERS — State Employees Covered. With few exceptions, 
^fc all employees of state government are required to participate 
in PERS from their first day of employment with the state. 
Certain groups of employees are exempt from mandatory 
membership, but individuals in those groups may nevertheless 
elect to become members. 

The principal exempt groups are: 

1. Elected officers; 

2. Employees who work less than 120 working days in any 
fiscal year; 

3. Employees directly appointed by the Governor; 

4. Appointed members of boards who are paid on a per 
diem basis; 

^k 5. Employees who start work with the state after their 
60th birthday; 

6. Legislative branch employees who work less than six 
months ; 

7. Employees whose positions are funded under the 
federal Comprehensive Employment and Training Act 
(CETA) (these employees must elect not to become 
members) . 

In addition, employees who are members of another retirement 
system supported wholly or in part by funds of the federal 
government, any state government or political subdivision, are 
exempt. Therefore, employees who are covered by one of the 
other retirement systems listed above are exempt from PERS; 
however, it is possible to belong to more than one system if 

-101- 



the employee works for more than one public employer. And, 
credits can be transferred from the teachers' retirement ,e^ 
system to PERS, and vice versa. 

Independent contractors are also excluded (see Chapter 1 
for a discussion of independent contractors) , but by agreement 
with the employer they can be included as members. 

PERS — Local Government and Political Subdivision 
Employees . Employees of local governments and political 
subdivisions can be covered by PERS through a contract between 
the employer and the Public Employees 1 Retirement Board (the 
state agency which administers PERS) . The legislative body of 
the employer (such as the county commission, city council, 
etc.) must adopt a resolution approving the contract, and the 
employees to be covered must approve it by a majority vote by 
secret ballot. 

An employee of local government or a political 
subdivision for more than two years may attempt to obtain 
coverage under PERS on his own initiative as well, by filing a 
request to be covered with the legislative body of the 
employer. The normal process to institute PERS coverage is 
then initiated by the legislative body. 

Employees who are covered under an existing local retire- 
ment system may come under PERS through a contract with the 
Board in the same manner. However, in that case it takes a 
two-thirds vote of the employees. + 

- 102 - 



Contributions . Both the employee and employer are 
^required to contribute to PERS. The contributions of 
employees are deducted from their wages or salaries, and these 
deductions and the amount of the employers 1 contributions are 
remitted to the Board on a regular basis. Contributions are 
based on the salary of the employee. 

G. Social Security and Income Tax Withholding 

1. Social Security 

Generally. Social Security coverage is almost universal 

in all types of employment. With only limited exceptions, all 

employers, including public employers, are required to 

contribute to the Social Security system, and to deduct Social 

Security taxes from their employees' paychecks if coverage is 

'elected under the Social Security Act. The most important 

exception to the public employer is for independent 

contractors (see Chapter 1 ) . 

Since the Social Security System is so widely known, it 
does not need further explanation in this handbook. Questions 
regarding its administration should be referred to the local 
Social Security Administration office, or to the Public 
Employees' Retirement Board of state government for questions 
involving state employees. 

2. Income Tax Withholding 
Generally. As with Social Security, employers are re- 
Iquired to withhold from their employees' wages and salaries 

-103 - 



state .and federal income taxes. The withholding rates are 
based on annual gross income projections, and exemption '*j| 
claimed by the employees. 

Recently, the abuse by an employee claiming too many 
exemptions for withholding purposes has become a serious prob- 
lem in Montana. Not only can the employee be assessed civil 
and criminal penalties for filing a false exemption claim 
($500.00 civil penalty and a criminal penalty of one year in 
prison and/or a fine of $1,000.00), but the employer can be 
held liable as well if it fails to withhold the proper amount. 
Individual officers and officials of the employer can be held 
personally liable for the proper amount. Therefore, an 
employer should ascertain the accuracy of an employee's exemp- 
tion claim to the extent possible. Employers are required tc ^ 
notify the Internal Revenue Service if an employee claims to 
be exempt himself from withholding, or claims more than 14 
withholding allowances; the Montana Department of Revenue must 
be notified if the employee claims more than nine withholding 
allowances for state income tax purposes. 

The local Internal Revenue Service (IRS) office 
should be consulted for information regarding federal with- 
holding, and the Montana Department of Revenue for state with- 
holding. 

H. Employee Retirement Income Security Act of 1974 (ERISA) 

Generally. The Employee Retirement Income Security Act 

CrJ 

of 1974 (referred to as ERISA) is a relatively recent law that 

- 104- 



may affect some public employers in Montana, depending on the 

^rircumstances . 

The main thrust of ERISA is the regulation of retirement 
plans for employees. Additionally, ERISA prescribes federal 
regulations for every "employee welfare benefit plan" and 
every "welfare plan" maintained by an employer or by an 
employee organization (such as a union) . Included in such 
plans are: 

1. Medical, surgical or hospital benefits; 

2. Sickness, disability, death or vacation benefits; 

3. Apprenticeship or other training programs. 

Effect of ERISA. The requirements and regulations under 

•ERISA are too detailed and complex to describe completely in 
r 
chis handbook. Basically, if the employees of a public 

employer are covered by one of the retirement systems 

mentioned in part F of this chapter, or are covered by a 

health insurance plan administered through state government, 

there is little need to worry about ERISA. It is in those 

cases where the employer, or the employer and employee 

organization together, are providing other kinds of retirement 

or health insurance coverage that the requirements of ERISA 

should be investigated. 

Generally, ERISA is designed to protect employees who are 
participants or beneficiaries of retirement and insurance 
plans. Among other things, the Act establishes permissable 
ainimum participation requirements, permissable exclusions 

- 105 - 



• 



from participation, coverage requirements, and "vesting" and 
contribution standards. And, quite apart from these! 4 
requirements and standards, the Act also grants some new 
rights to pension plan participants. The most important of 
those is probably "the right to know" provision. Essentially, 
the law gives employees the right to find out how a plan 
affects them in detail, and its financial status. 

The U. S. Department of Labor, which administers parts of 
ERISA, says that the Act does not do the following: 

1 . It does not require employers to offer pension 
plans ; 

2. It does not guarantee a pension to every worker, but 
only to workers who have satisfied plan requirements 
which are consistent with the minimum standards of A 
the law; 

3. It does not set specific amounts of money to be paid 
out as pensions, but it does require that a survivor 
benefit, if elected, be at least 50% of the 
retirement benefit; 

4. It does not provide that an employee can 
automatically transfer his pension if he changes 
jobs. 

I. Occupational Health and Safety 
Generally. Public employers in Montana are exempt from 
compliance with the federal Occupational Safety and Health Act 
(OSHA) , since the Act exempts state and local governments and&nf 

- 106 - 



political subdivisions. However, public employers are 

•required to comply with the Montana Safety Act and its 
requirements, and under the Montana Safety Act the Workers' 
Compensation Division (which administers the Act) has adopted 
essentially the same health and safety standards applicable 
under OSHA. For all intents and purposes then, public 
employers must comply with OSHA standards, although they are 
enforced by the Montana Workers' Compensation Division and not 
the federal government. 

Health and Safety Standards. The Montana Safety Act 
itself requires employers to furnish a place of employment 
which is safe for employees. Additionally, employers must 
furnish, use and require the use of safety devices and 
Safeguards to make the place of employment safe. And, whether 
the employer is the owner or the lessee of the place of 
employment, it must repair and maintain the place of 
employment to make it safe. 

The health and safety standards promulgated by regulation 
under OSHA are extensive. Copies can be obtained by 
consulting the Workers' Compensation Division. They cover 
nearly anything that might affect the health or safety of the 
employees in the place of employment, including the following: 

1. National Electrical Code requirements (from loose 
wires to ungrounded equipment) • 

2. Safety of abrasive wheel machinery; 

j^ 3. Construction and placement of compressed gas con- 
tainers ; 

- 107 - 



4. Marking of exits; 

5. Maintenance of portable fire extinguishers; 

6. Guarding floor and wall openings, platforms and* 
runways • 

7. General housekeeping (from unmopped puddles to 
flammable rubbish piles to trash in hallways) ; 

8. Machinery guards. 

Enforcement. The Montana Workers 1 Compensation Division 
enforces occupational health and safety standards in Montana. 
The Division conducts inspections, both on its own initiative 
and upon complaint of an employee. A report of an inspection 
is given to the employer with citations of what was wrong. 
The Division can order an employer to make changes, additions, 
repairs and improvements as may be needed to make the workin 
conditions safe. It can stop the use of equipment or order 
closure or cessation of work if necessary. An employer can 
also be convicted of a misdemeanor for violation of any health 
or safety standard. 

J. Collective Bargaining 
Generally. A state law enacted in 1973 gave most public 
employees in Montana the right to organize and to bargain 
collectively through representatives on questions of wages, 
hours, fringe benefits and other conditions of employment. 
Elected officials and certain supervisory employees, 
management officials, confidential employees and professional 
employees as defined in the law were not given this right! g 

- 108 - 



The definitions of supervisory employees and management 
■jfficials are different than under the minimum wage and 
overtime compensation law (see Chapter 3), but in practice 
they are nearly the same. 

Organization of Public Employees. The Board of Personnel 
Appeals determines the appropriate bargaining unit for pur- 
poses of collective bargaining. Essentially, the common 
interests of the employees are used as the criteria; in 
practice, the Board will approve nearly any group of employees 
as an appropriate unit. After a Board-supervised secret bal- 
lot election, the Board certifies the labor organization which 
will serve as the exclusive representative of the bargaining 
unit. 

• 

Bargaining. By law the Governor, the governing body of a 
local government or political subdivision, the Commissioner of 
Higher Education, or their designated representatives, 
represent the public employer in collective bargaining. In 
practice, collective bargaining negotiations are usually 
conducted by representatives. 

Both the employer and the employees are required to 
bargain in "good faith." Failure to do so is an "unfair labor 
practice" which can be appealed to the Board. 

Collective Bargaining Agreements. Any agreement reached 

^J 3 the public employer and an exclusive representative must be 

- 109- 



reduced to writing and signed by the parties. In most cases a 
vote of the members of the bargaining unit will be conducted^ 
before the agreement is signed by the labor representative. 

An agreement can cover essentially anything relating to 
wages, hours, fringe benefits and other conditions of 
employment, as well as a grievance procedure for resolving 
disputed interpretations of the agreement and complaints of 
employees (see Personnel Policies and Procedures in part L of 
this chapter) . However, a collective bargaining agreement 
generally cannot decrease the minimum wages and overtime 
compensation requirements of the minimum wage and overtime 
compensation law (see Chapter 4), or increase or decrease 
annual leave and sick leave benefits (see part B of this 
chapter) . 

Unfair Labor Practices. The collective bargaining law 
makes certain activities of the employer or the union "unfair 
labor practices" which can be appealed to the Board of 
Personnel Appeals. The Board can then remedy such practices 
by order. 

It is an unfair labor practice for an employer to: 

1. Interfere with, restrain or coerce employees in the 
exercise of the rights of employees to organize; 

2. Dominate, interfere or assist in the formation of 
administration of any labor organization; 

3. Discriminate against employees to encourage or 
discourage membership -in any labor organizatiornf 

-110 - 



• 



to 



(this doesn't prohibit an agreement requiring union 
initiation fees and monthly dues to be deducted from 
wages) ; 

4. Refuse to bargain collectively. 

It is an unfair labor practice for a labor organization 

1. Restrain or coerce employees in the exercise of the 
rights of employees to organize, or to interfere 
with the right of the employer to choose its bar- 
gaining representative; 

2. Refuse to bargain collectively in good faith; 

3. Use agency shop fees for contributions to political 
candidates or parties at state or local levels. 



m K. Political Activity 

1 . Generally 
The political activity of state and local government 
employees is regulated by both federal and state law. The 
activities prohibited and permitted under each law are dif- 
ferent, as described below. 

2. Federal Law 
Employees Covered. The federal law governing political 
activity of public employees is known as the Hatch Act. The 
Act was recently liberalized, but it still applies to many 
employees of state and local government. Under current law, 
the Hatch Act covers individuals employed by a state or local 
^^agency whose principal employment is in connection with an 

- 111 - 



activity financed in whole or in part by loans or grants from 
the federal government. The Act does not cover employees who(e^ 
exercise no function in connection with that activity, even 
though their positions are financed with federal funds (this 
is unlikely to happen) , nor are employees of an educational or 
research institution, establishment, agency or system. 
Basically, any public employee whose salary is paid completely 
or partly from federal funds is covered by the Hatch Act, 
except employees of school districts and the University 
System. 

Prohibited and Permitted Activities. Public employees 
covered by the Hatch Act cannot: 

(a) use their official authority to affect the result of 

an election 01 nomination to office; \0 

(b) directly or indirectly coerce other employees to 
pay, lend or contribute anything of value to a par- 
ty, committee, organization, agency or person for 
political purposes; 

(c) be candidates for elective offices. 

They are, however, permitted to vote and express their opin- 
ions on political subjects and candidates and to be candidates 
for non-partisan offices. 

3. State Law 
Employees Covered. The state political activity law, 
known as the "Little Hatch Act," covers "public employees." ^y 

- 112 - 



Therefore, it would seem to cover all employees of state or 
^local government or political subdivisions, including em- 
ployees of school districts and the University System. 

Prohibited and Permitted Activities. The state Little 
Hatch Act prohibits any public employee from soliciting any 
money, influence, service or other thing of value, or other- 
wise aiding or promoting any political committee or the nom- 
ination or election of any person to public office, while on 
the job or at his place of employment. The right of a public 
employee to express his personal political views is expressly 
permitted. 

It should be noted that state law does not prohibit a 
(public employee from being a candidate to an office. In fact, 
if a public employee (except a teacher) is elected to a public 
office in city, county or state government, the employee must 
be granted a leave of absence to serve in that position for a 
period not to exceed 180 days (see Chapter 5). Of course, the 
employee could not campaign for office while on the job. And, 
if covered by the federal Hatch Act, he or she could not be a 
candidate for a partisan elective office. 

As also noted in Chapter 6, the Montana Human Rights Act 
prohibits discrimination against any employee for his or her 
political beliefs. 



113 



L. Personnel Policies and Procedures 
1 . Generally 

m 

Personnel policies and procedures generally are 
considered to be the rules and standards which govern the 
internal management of the employees in an organization. They 
can be either written or oral, and can be either promulgated 
unilaterally by the employer, agreed upon by the employer and 
employee as a part of the contract, or enacted by the 
Congress, legislature, or governing body. Personnel policies 
can cover a wide range of subjects including hours of work, 
dress standards, and procedures for the employee to pursue 
grievances against the employer. Obviously, policies and pro- 
cedures can have a significant impact on the rights and 
benefits of employees. This part describes the authority of 
an employer to adopt such policies, the effect of personnel 
policies in certain cases, and grievance procedures that are 
currently in effect for some public employees. 

Authority to Adopt Personnel Policies. All employers 
have the inherent power to adopt personnel policies. This 
power comes from the general right of the employer to 
supervise and manage its employees. 

In the case of public employers, the power to adopt 
personnel rules is usually expressly granted by statute. For 
example, all department heads in state government are given 
the power to prescribe rules, consistent with law and rules 
established by the governor, for the administration of thei(y 

- 114 - 



departments, including the conduct of their employees. They 
would have this power without the statute. Many other 
statutes also grant personnel rulemaking power to other 
executive officers of public employers, including local 
governments and political subdivisions. They are too numerous 
to list here, but can usually be found by reviewing the 
statutes creating the particular public body in question. 

Personnel Powers and Policies of the State Department of 
Administration. The personnel policy powers of the state 
Department of Administration deserve special mention. This 
Department is the administrative arm of state government. It 
has a wide range of responsibilities relating to internal 
operations of state government, and in many cases its 
^^ctivities affect local governments and political subdivisions 
"as well. However, its powers over local government in the 
area of personnel matters is extremely limited. 



By statute the Department of Administration is required 
to develop and issue personnel policies for state government; 
it does not have power to adopt personnel policies over local 
governments, except through merit system requirements. The 
personnel policies adopted by the Department can be found in 
the Administrative Rules of Montana (ARM) and in the Montana 
Operations Manual (MOM). They cover such subjects as sick 
leave, annual leave, leave due to emergencies, military leave, 
jury duty and witness leave, holidays, compensation time and 
jpyertime, decedent's warrants, new employee orientation, 



• 



-115 - 



moving and relocation expenses, reductions in force, exit 
interviews, employee performance appraisal, discipline 

p 

handling, employee record keeping, grievances, equal 
employment opportunity, and employee incentive awards. 



In most cases these policies must be followed by the 
state agencies, but the individual agencies can supplement 
them with further policies that are not in conflict. In other 
cases (discipline handling and grievances are two notable 
areas) agencies are not required to follow the Department's 
policies, but must "adopt rules to implement" them, which has 
the same effect. In addition, in most instances the policies 
of the Department are not applicable if they conflict with 
negotiated labor contracts. (However, it must also be kept in 
mind that negotiated labor contracts, in turn, generally can- 
not decrease the minimum wage and overtime standards provide^ 
under the minimum wage and overtime compensation law, nor in- 
crease or decrease the annual leave and sick leave benefits 
provided by law — see Chapter 3 and part J of this chapter.) 

The only area where the personnel policies of the Depart- 
ment of Administration may affect local governments and 
political subdivisions is through the statewide merit system. 
Actually, the state Merit System Council is legally 
responsible for issuing policies on the administration of the 
Merit System, but the Council is part of the Department and 
its policies are published as a part of the Department's 
policies in the Administrative Rules of Montana. The State 
Merit System requirements and policies apply to all cover^/ 

- 116 - 



employees, whether employed by state or local government, 
engaged in the administration of grant-in-aid programs under 
".ederal law or regulations which require the state or local 
agency receiving such funds to establish personnel standards 
on a merit basis. About 20% of the state employees are cur- 
rently covered under the state merit system. In actual prac- 
tice, no employees of local governments or political subdivi- 
sions are currently covered. 

Effect of Personnel Policies; Recent Court Decisions. One 
would think that an employer could adopt such personnel 
policies for its employees as it sees fit, but this is not the 
case. Any policy adopted must conform to all legal re- 
quirements. Such requirements include minimum wage and over- 
time compensation, annual leave, and a number of others that 
fiave previously been described in this handbook. They also 
include equal employment opportunity and anti-discrimination 
requirements discussed in Chapter 6. It is therefore impor- 
tant before personnel policies are adopted by any employer, 
including a public employer, that a determination be made that 
the policies are not contrary to law. 

Some recent decisions of the Montana Supreme Court have 
cast considerable doubt on the legal effect of personnel 
policies of employers in Montana. In one case the Court held 
that a private employer could not unilaterally adopt new 
personnel policies which would automatically become a part of 
Ae employment contract. (See Chapter 1 for a discussion of 

-117 - 



employment contracts.) Shortly thereafter this same rationale 
was applied in the case of a public employee (a University 
System professor) . However, the Court has also said that even 
though new personnel policies are not part of the employment 
contract with existing employees, they still must be followed 
(under what is called the "covenant of good faith and fair 
dealing") by the employer where they give benefits to those 
employees. Benefits include procedures for an employee to 
appeal a grievance he may have against the employer. 

Under these recent Court decisions, some personnel 
policies thought to apply to all employees may not apply to 
employees who were already employed by the employer when the 
policies were adopted. On the other hand, insofar as such 
policies grant certain benefits or rights to those employees, 
they probably will have to be followed anyhow. If they take 
away rights or benefits previously in existence, they probably 
cannot be made applicable to existing employees. 

The full impact of these recent Supreme Court decisions 
is yet to be realized. The best advice that can be given at 
the time of publication of this handbook is this: if a 
public employer has adopted personnel policies which give any 
rights or benefits to employees, they must be followed ; if new- 
policies are adopted which lessen or eliminate any rights or 
benefits previously in effect for employees, they may not be 
applicable to employees hired before the time of adoption. / * 



118 - 



2. Grievance Procedures 
Generally. Grievance procedures are uniform procedures 
l/hich have been established for an employee to appeal a 
complaint he has against the employer. Procedures can differ 
widely. They are either established by the employer by its 
own action, or by employment agreement. In many cases they 
are established through collective bargaining agreements. 
They may cover almost any kind of complaint, or deal with only 
one specific type of grievance. 

Grievances of State Employees. There are several 

grievance procedures available to state employees, some 

established by law and others by administrative policy. Only 

those established by statute or by the Department of 

Administration are described below. 
I 

By law, all state employees who are classified under the 
comprehensive job classification and pay plan of state 
government may appeal grievances concerning their 
classifications. Appeals under this system are conducted 
according to rules adopted by the Board of Personnel Appeals. 
Under the rules, job classification appeals, if pursued 
through all the prescribed steps, would ultimately be heard by 
the Board. 

Employees of the Department of Highways and the 

Department of Fish, Wildlife and Parks are given special 

grievance procedure rights by statute. Any dissatisfaction of 

hese employees concerning a "serious matter" of their 

- 119 - 



employment based on working conditions, supervision or the 
result of administrative action, except those arising from the 
operation of the statewide classification plan, can bJp 
appealed to the Board of Personnel Appeals after the internal 
grievance procedures of the applicable Department have been 
utilized. Grievance appeals in these instances are also 
conducted according to rules adopted by the Board. 

The state Department of Administration by administrative 
rule has adopted grievance procedures for all other 
departments. Although these procedures are not mandatory, 
each department is required to adopt rules to implement them, 
which has the effect of being mandatory. Employees may appeal 
grievances concerning working conditions, supervision and 
administrative action under these procedures through internal 
steps in their own department; there is no appeal to the Boar^ 
of Personnel Appeals. 

Grievances of Local Government Employees. There are no 
grievance procedures established by statute for employees of 
local governments or political subdivisions. Some local 
governments, however, have adopted administrative policies 
concerning grievances. Grievance procedures are also provided 
in some collective bargaining agreements. 

Grievance Procedures in Collective Bargaining Agreements. 
Negotiated labor contracts commonly contain provisions on 
grievance procedures. In some instances these provisions must 
be followed rather than the procedures available under statute© 

- 120 - 



or administrative policy; in other cases the employees may 
itilize either one, but not both. 

Court Review of Administrative Grievance Procedure 
Decisions . Decisions of the Board of Personnel Appeals under 
the grievance procedures for state employees described above 
may be appealed to state district court. The Montana Supreme 
Court has ruled that a final decision of an agency under the 
grievance procedures promulgated by the Department of 
Administration cannot be appealed to court. However, there is 
a difference between appealing a case to court and filing a 
direct court action. Thus, the Supreme Court also has held 
that it is possible for a state employee to sue his employer 
directly in those cases where there is no appeal. Ordinarily, 
however, grievance procedures set up by statute must first be 
exhausted. 



• 



121 - 



2° 

i- S -o 

m ^ en 
Z O 



CHAPTER 6. DISCRIMINATION IN EMPLOYMENT 



A. Federal and State Laws 122 

1. Generally 122 

2. Federal Laws 123 

Generally 123 

Federal Constitution 123 

Civil Rights Act of 1964 123 

Presidential Executive Orders 124 

Equal Pay Act 124 

Discrimination in Employment Acts .... 125 

3. State Laws . , 125 

State Constitution 125 

Montana Human Rights Act 126 

Governmental Code of Fair Practices ... 127 

Equal Pay 127 

Handicapped 128 

Maternity Leave Act 128 

B. Some Prohibited Discriminatory Practices 128 

Generally 128 

Compensation and Benefits 128 

Recruiting 129 

Job Applications and Interviews 129 

Mandatory Retirement 129 

Statistical Discrimination 129 



A. Federal and State Laws 
1 . Generally 
In the last three or so decades, several laws have been 
enacted at both national and state levels regulating 
discrimination in employment. This area of law is also com- 
monly referred to as "equal employment opportunity." Given 
the breadth of the law regulating employment discrimination, 
it is impossible to describe completely all the legal require- 
ments of discrimination law in this handbook. Indeed, a com- 
plete handbook could be published on this one subject. 



• 



The purpose of this chapter is not to acquaint the public 
ployer with discrimination law, but only to provide a basic 

- 122.- 



description of the laws involved and some of the practical 
aspects of application of these laws. The reader should refer 
to Appendix B for a listing of agencies to consult if ques- 
tions arise, and which have reference material available more 
thoroughly describing anti-discrimination requirements. 

2. Federal Laws 
Generally. The following paragraphs list and briefly de- 
scribe the major federal laws which regulate employment 
discrimination. They are not a complete listing. 

Federal Constitution. The Due Process Clause of the 
Fifth Amendment and the Due Process and Equal Protection 
clauses of the Fourteenth Amendment have been interpreted by 
the courts to forbid "invidious" discrimination in government 
employment, including employment by state and local 
governments. Protection against discrimination under these 
clauses is accorded not only to minority races, but to other 
individuals or groups as well. For example, mandatory leave 
for pregnant women employees after five months of pregnancy 
has been held to be unconstitutional. Because of these recent 
court interpretations of the Constitution of the United 
States, it has become obvious that many of the statutes 
prohibiting discrimination are in fact only implementing the 
Constitution and not creating new law. 

Civil Rights Act of 1964. Title VII of the Civil Rights 
Act of 1964 is the keystone of employment discrimination lavJ* 

- 123 - 



It prohibits discrimination in all aspects of employment -- 
A c rom hiring to firing and virtually everything in between — 
on the basis of race, color, religion, sex or national origin 
(commonly called protected classes) . The Act created the 
Equal Employment Opportunity Commission (EEOC) , which 
investigates complaints of employment discrimination and 
attempts to negotiate settlement in cases in which the 
Commission finds that discrimination has occurred. Court 
action can follow if a case is not settled. (There is a state 
Commission which does the same thing — see below.) 

Presidential Executive Orders. There are several Exe- 
cutive Orders of the President which prohibit discrimination 
by federal contractors on the basis of race, color, religion, 
^P ex, national origin and age. These orders may affect state 
and local governments when federal funds are involved in some 
activity; "affirmative action" plans are required under these 
orders, which are enforced by the Office of Federal Contract 
Compliance Programs. 

Equal Pay Act. The Equal Pay Act is actually an 
amendment to the Fair Labor Standards Act (the federal minimum 
wage and overtime compensation law) . It requires equal pay 
for equal work without regard to sex, and is administered and 
enforced by the Equal Employment Opportunity Commission. 
Coverage applies to all employees covered by the minimum wage 
and overtime compensation provisions of the wage and hour law. 
ee Chapter 3. The U. S. Department of Labor takes the po- 

- 124 - 



an 



sition that the National League of Cities case referred to in 
Chapter 3 did not invalidate application of the Equal Pay Ac% 
to state and local government employees.) 

Discrimination in Employment Acts. The Age 
Discrimination in Employment Act is a federal statute which 
forbids employers (including state and local governments) to 
discriminate against individuals between the ages of 4 and 70 
on the basis of age. Enforcement is through the Equal 
Employment Opportunity Commission. Another new federal law, 
the Age Discrimination Act of 1975, applies to employers who 
receive federal financial assistance, without regard to any 
age group. 

A federal district court in Montana has ruled that th^ 
Age Discrimination in Employment Act is unconstitutional in 
its application to state and local government employees, on 
the same reasoning as the National League of Cities case (see 
Chapter 3) ; other federal courts have held just the opposite. 
However, even if the Montana federal court's ruling is 
eventually confirmed by a higher federal court, a state law 
also would prohibit age discrimination by public employers 
(see below) . 

3. State Laws 
State Constitution. The Montana Constitution prohibits 
the state (which would include local governments and political 
subdivisions) from discriminating against any person "in t%} 

- 125 - 



exercise of his civil or political rights on account of race, 
color, sex, culture, social origin or condition, or political 
jr religious ideas." The state Constitution also contains 
equal protection and due process clauses similar to the 
federal Constitution. In addition, the state Constitution 
prohibits requiring a religious or partisan test or 
qualification of any teacher as a condition of employment. 

Montana Human Rights Act. The Montana Human Rights Act 
(1974) is the state version of the federal Civil Rights Act. 
In the area of employment, it prohibits discrimination on the 
basis of the same factors as the federal law (race, color, 
religion, sex or national origin) , and also forbids employment 
discrimination on the basis of handicap, marital status, age, 
^nd in the case of public employees, political beliefs. It 
applies to all employers in Montana, including public 
employers. The Act is administered by the Montana Human 
Rights Commission, which is attached to the Montana Department 
of Labor and Industry. 

Lower courts in Montana have ruled that employees 
complaining of employment discrimination and seeking monetary 
damages must go through the complaint procedures of the Human 
Rights Commission before they can go to court. An amendment 
to the Act in 1983, however, authorizes direct court action 
under certain circumstances. Additionally, pursuant to a 
worksharing agreement, the federal Equal Employment Opportu- 
ity Commission defers nearly all investigations of violations 
f the federal Civil Rights Act to the Montana Human Rights 

- 126 - 



i 



Commission. y 

Governmental Code of Fair Practices. The Governmental 
Code of Fair Practices was enacted one year after the Human 
Rights Act (in 1975), and is viewed as an extension of the 
Human Rights Act. It requires state and local government 
officials and supervisory personnel to recruit, appoint, 
assign, train, evaluate and promote personnel on the basis of 
merit and qualification without regard to race, color, 
religion, creed, political ideas, sex, age, marital status, 
physical or mental handicap, or national origin. All public 
employers are required to adopt written directives to 
implement this policy. The Code has other nondiscrimination 
provisions, relating to training programs, employmer|| 
referrals and placement services. Another part of the Code 
requires every state or local contract for the construction of 
public buildings, or for providing other public works or for 
other goods and services, to contain a clause that all hiring 
must be on the basis of merit and qualifications, and that 
there will be no discrimination on the basis of the same fac- 
tors for recruitment, etc., listed above. 

Equal Pay. Montana has a state equivalent to the federal 
Equal Pay Act. It applies to all employers, and makes it 
unlawful to pay women less than that paid to men for 
equivalent service. 



-127 - 



Handicapped. A separate state law prohibits the dis- 
imination, in hiring or employment, against any person 
because of a physical handicap of that person. Essentially, 
this law duplicates the Human Rights Act and the Code of Fair 
Practices as they apply to handicapped people, but the 
enforcement is somewhat different. Under this Act there is no 
administrative enforcement; however, it does provide for 
criminal penalties. 

Maternity Leave Act. Montana's Maternity Leave Act 
prohibits discrimination against pregnant employees. Its pro- 
visions are explained in Chapter 5. 

B. Some Prohibited Discriminatory Practices 
Generally. The following paragraphs are intended to 
provide examples of some of the interpretations of the above 
listed laws that have been made by the courts and the 
administrative agencies involved. Only the most common 
examples frequently encountered by public employers are given. 

Compensation and Benefits. No discrimination in the 
compensation or benefits of employees is allowed on the basis 
of race, color, religion, sex, national origin, age, political 
beliefs, marital status, or physical or mental handicap. This 
applies not only to pay, but also to overtime, paid vacations, 
holiday pay, and so forth. However, compensation can be based 
An seniority if there is no attempt to use seniority as a way 
To discriminate. 

-128- 



Recruiting and Hiring. An advertisement or notice of a 
job cannot indicate a preference that adversely affects £ 
member of a protected class unless the preference is a bona 
fide occupational qualification. For instance, recruiting 
only college graduates would be suspect (because it might 
adversely affect minorities) , unless it can be shown that a 
college education is necessary. Age requirements, even if 
stated as "young" or "student," would also be considered a 
form of age discrimination. These same principles apply to a 
hiring decision. 

Job Applications and Interviews. Questions relating to 
race, religion, age, sex, marital status, etc. should be 
avoided in job applications and interviews, because they are 
usually irrelevant and show evidence of discrimination. m 

Mandatory Retirement. The Montana Supreme Court has 
ruled that the Human Rights Act in effect repealled a mandatory 
age retirement statute for teachers. If extended to its 
logical conclusion, this case means that mandatory retirement 
statutes and policies in Montana are void. 

Statistical Discrimination. Even if an employer 
evidences no obvious discrimination, it might be held to 
discriminate if certain classes are underrepresented in the 
workforce of the employer. For example, if on the basis of 
statistical information it is found that women are 

M 

underrepresented in any of the -positions in the agency, tha 



129 - 



finding might be used as evidence that the employer 



^^ discriminates in its employment practices 



> 



130 - 



> 



g 
-n co 
30 o 

°£ 

<3§S 

m > 

5| 



CHAPTER 7. DISCHARGE AND LAYOFF FROM EMPLOYMENT 



A. Discharge 132 

1. Generally 132 

Employment Contract 132 

Termination — At Will Employees .... 133 

2. Discharge for Cause 136 

Generally 136 

Cause Defined 136 

Neglect of Duty; Negligence; 

Incompetence; Inefficiency 137 

Disobedience of Employer's Rules, 

Instructions or Orders 137 

Cause Under Personnel Policy of 

Department of Administration 137 

3. Unlawful Reasons for Discharge 133 

4. Termination Procedures 139 

5. Appeals 140 

B. Other Disciplinary Action Against Employees ... 141 

C. Layoffs (Reductions in Force) 141 

Generally 141 

Layoff Procedures 142 

Layoff of State Employees 142 

D. Payment of Wages of Discharged Employees 142 

E. Blacklisting of Discharged Employees 143 

Statement of Reason for Discharge; 

Blacklisting 143 



One of the most difficult aspects in employee-employer 
relations is the firing or layoff of an employee by the 
employer. Such action is difficult not only because of the 
emotions and hardships involved, but also because of the 
uncertainty that exists over legal requirements that may or 
may not apply. Employers frequently find themselves embroiled 
in legal disputes and lawsuits over firings or layoffs they 
thought were proper and in the best interests of the employer 
at the time. The purpose of this chapter is to describe the 
general legal requirements involved in terminating or laying 

- 131 - 



off an employee. The same principles generally apply for 
other job actions, such as demotion and suspension. 

A. Discharge 
1 . Generally 
Employment Contract. Whenever an employer is 
contemplating firing an employee, it must keep in mind that an 
employment contract is involved in all employee-employer 
relations. The concept of employment contracts is explained 
in Chapter 1 and should be reviewed, but a few principles of 
employment contracts deserve repeating. 

An employment contract is created when an employee 
accepts an offer from the employer to carry out certain work. 
The contract may be written or oral, and consists of the terms 
and conditions agreed upon between the employee and employer 
at the time of employment. Some of these terms and conditions 
may be expressed (explicitly made a part of the contract in 
writing or discussed at the time) or only implied (terms that 
aren't explicitly stated but that exist by implication due to 
necessity or other good reason) . Once created, an employment 
contract is enforceable according to its terms, like any other 
contract. Neither party can violate the contract without 
legal liability for breach of that contract, nor can either 
party change the terms of the contract without the consent of 
the other. 

Employment contracts are, of course, subject to 
applicable laws that govern % the employee-employer 

- 132 - 



relationship. Various legal requirements may enter the 
W picture; in effect, they are part of the employment contract 
by law. Examples are minimum wage laws, nondiscrimination 
laws, employee benefits mandated by law, and others. Most of 
them are described in this handbook. 

Therefore, whenever an employer is contemplating taking 
some employee job action, such as firing the employee or 
laying him off, the employment contract must be taken into ac- 
count along with the legal requirements described in this 
handbook. The key question to ask is: Is the contemplated 
job action allowed under the employment contract? 

Termination ■ — At Will Employees. By law in Montana, any 
m employment having no specified term may be terminated at the 
will of either party. This means that if an employee is not 
hired with a guarantee that he will be employed for a definite 
period of time, the employer may fire the employee at any 
time, for any reason; in fact, there is no requirement to give 
any reason at all. Such employees are called "at will 
employees." This law applies to public employees in Montana, 
as well as private employees. And, since most public 
employees are not hired with a guaranteed term of employment, 
most public employees are "at will employees." 

But, as might be expected, terminating employees is not 

as easy as it might seem. Other legal factors come into play. 

W The first and primary one is the employment contract itself. 

- 133 - 



In addition, many public employers in Montana, particularly 
state agencies, have adopted personnel policies which require 
that there be grounds for an employee to be terminated, or, in 
other words, that the employer must have a good reason. Such 
reasons are sometimes called "good cause" or simply "cause." 
As was previously discussed, personnel policies in effect when 
an employee is hired for a particular position, or adopted 
later, and that grant employees certain rights, such as 
grievance hearings, must be followed. This is true even if 
the personnel policy is not a part of the employment contract. 

Besides personnel policies, which may or may not be part 
of the employment contract, collective bargaining agreements 
may also enter the picture. Many public employees are covered 
by these agreements, and these agreements usually contain 
provisions on such actions as termination, layoff and demotion 
of employees. These provisions frequently require that 
specific grounds (or "cause") exist before an employee can be 
fired. Obviously these provisions must be followed, too, 
since collective bargaining agreements are employment 
agreements. 

Other factors must also be considered. Particular laws 
prohibit firing employees for various reasons. They include 
laws prohibiting discrimination in employment: it is unlawful 
to fire an employee in Montana for reasons of race, color, 
age, sex, religion, handicap, political ideas, marital status 
or national origin. And, it is unlawful to retaliate against 
an employee (including firing) because he asserts his civil (r 



134 - 



rights under the nondiscrimination laws. (Discrimination laws 
A are described in Chapter 6.) There are numerous other laws 
which also prohibit firing or other retaliatory action for 
other reasons, described in part A in this chapter. All of 
these prohibitions are actually a part of the employment 
contract by implication in a legal sense, but are usually 
thought of separately. 

Under recent court decisions, it has been held that an 
employee cannot be fired if the termination violates "public 
policy." "Public policy" is defined as "the principles under 
which freedom of contract and private dealing is restricted 
for the good of the community." In other words, if a ter- 
mination is made for what the courts consider unjust or bad 
faith reasons, the termination will be invalid. An example is 
^when an employee is fired after refusing to commit a criminal 
act or to file a false report. Similarly, a termination can 
be invalid if the employer fails to follow its personnel 
policies in the firing (such as requiring grounds for termina- 
tion or providing for grievance appeals) , even if those 
policies do not apply to the particular employee because they 
were not in effect when the employee was hired. 

So it can be seen that as a practical matter "terminable 
at will employees" aren't common. If, however, the employer 
has no personnel policy in effect that governs termination of 
employees, there are no provisions in the employment contract 
requiring reasons to fire employees, and the legal 
prohibitions on firing employees described in part A in this 

- 135 - 



chapter do not apply K an employee probably can be fired 
without reason at any time. But no public employer should 
rely on this being the case; legal advice should always be 
sought first. 

2. Discharge for Cause 
Generally. Employment contracts, personnel policies and 
various laws may prohibit firing an employee except for 
"cause." For example, the discipline-handling personnel 
policy of the State Department of Administration (which all 
state agencies are required to follow and implement by their 
own personnel policies) requires "just cause" before an 
employee can be terminated. Additionally, employees hired for 
a specified term can be terminated only for cause. "Cause" 
may or may not be defined in each instance. This part 
discusses the general meaning of the term as developed by the 
courts, and under the personnel policy of the Department of 
Administration. 

Cause Defined. "Cause" generally means a default in duty 
on the part of the employee whose natural tendency is to 
injure the employer's business. Typical reasons which justify 
the dismissal of an employee for cause are neglect of duty; 
negligence; incompetence; inefficiency; dishonesty; disobe- 
dience of the employer's rules, instructions, or orders; inso- 
lence or disrespect; unfaithfulness to the employer's 
interests; and immoral, disreputable and unbecoming conduct. 

- 136 - 



Neglect of Duty; Negligence; Incompetence; Inefficiency. 
™ The law implies that an employee by entering into a contract 
of employment is competent to perform the work undertaken. 
Ordinary and reasonable skill, care and diligence are required 
of all employees, but they cannot be required to exercise the 
highest degree of skillf ullness and care. 



Disobedience of Employer's Rules, Instructions or Orders. 
An employee must obey all reasonable and lawful rules, 
instructions and orders of the employer. An employee cannot 
be required to violate a law or regulation or aid in the 
violation of a law or regulation, such as in filing a false 
report. Willful or intentional disobedience as a general rule 
^justifies dismissal of the employee. Dismissal is not 
justified where the rules, instructions or orders are not 
known to the employee (or where there is no good reason why he 
should have known about them) , or where violations relate to 
trivial and unimportant matters. 

Cause Under Personnel Policy of Department of Administra- 
t ion . The state Department of Administration has adopted a 
"discipline handling" policy for implementation by all state 
agencies. Among other things, the policy prohibits "punitive 
discipline" against a state employee unless there is "just 
cause." "Punitive discipline" includes termination of an 
employee under the policy. 



• 



137 



Pursuant to this policy, the requirement of "just cause" 
is met if the employee violates an established agencyj 
standard, legitimate order, policy, or labor agreement, or 
fails to meet applicable professional standards. To terminate 
an employee for one or more of these reasons, the employee 
must have actual knowledge of the existence of the standard, 
order, and so forth, or at least there must be a reasonable 
expectation that he would have knowledge of them. 

The Department's policy does not apply to local 
governments and political subdivisions. 

3. Unlawful Reasons for Discharge 
It is illegal to terminate or retaliate against an em- 
ployee for any of the following reasons: 

1 . Attachment or garnishment served on the employer^ 
against the wages of the employee; 

2. Pregnancy of the employee; 

3. The filing of a complaint by the employee against 
the employer charging a violation of the maternity 
leave law; 

4. For the purpose of circumventing the laws granting 
annual leave and military leave benefits to public 
employees ; 

5. Opposition by the employee to any of the 
discriminatory practices forbidden by the Civil 
Rights Act and the Montana Human Rights Act, or his 
filing of a complaint, testifying, providing 



138 







assistance, or participating in any manner in an 
investigation or proceeding under those Acts; 

6. Discriminatory reasons prohibited by the Civil 
Rights Act and the Montana Human Rights Act (see 
Chapter 6) ; 

7. Participation by the employee in union activities; 

8. Filing a complaint against the employer under the 
FLSA, Workers 1 Compensation Act, minimum wage and 
overtime compensation law, etc.; 

9. Refusal of the employee to participate in an illegal 
or immoral act. 



4. Termination Procedure 
The termination of an employee may require that certain 
^procedures be followed, such as notice and an opportunity for 
the employee to have a hearing. The employee might also be 
entitled to appeal his termination through a grievance 
procedure (all state employees are given this right -- see 
Chapter 5, Grievance Procedures). Whether or not certain 
procedures must be followed will depend on the personnel 
policies of the employer or labor agreements that are in 
effect at the time. In all cases the employer should check to 
see if any such policies or agreements are applicable, and 
follow them to the letter. 

Since most public employees can be terminated only for 

"cause" (see above) t it is important that cause be documented. 

£ A termination can be easily reversed on an appeal or by a 

- 139 - 



court because of the employer's failure adequately to document 
and prove cause. The best way to do this is to document all 
circumstances leading up to a termination in writing before 
the actual termination action is taken. Reprimands and other 
statements or notices by the employer that an employee has 
violated a standard, order, policy, etc., should always be 
given in writing, along with documentation that the employee 
received them, whenever it is contemplated that termination 
might result. The old maxim that the employer should leave a 
"paper trail" has been proven to be accurate. 

5. Appeals 
The employer's personnel policies governing grievance 
procedures usually determine what appeal rights an employee 
may have after he is terminated. Collective bargaining 
agreements may also contain appeal provisions. (See Chapter 5 
for a discussion of some of the grievance procedures currently 
applicable to state government.) 

Court action might also be brought by the employee. As a 
result of a recent Montana Supreme Court decision, there does 
not seem to be a requirement that the employee appeal his 
termination through internal grievance procedures first, 
before initiating court action, although the law on this point 
remains unsettled. However, this may not be the case in all 
situations, especially where the grievance appeals rights are 
set up by statute. Termination of employees of the Department 
of Highways and the Department of 'Fish, Wildlife and Parks 

- 1 4 - 



might be exceptions, for example, since their grievance appeal 
rights are established by statute and not by administrative 
policy. Direct court action will usually be based on breach 
of contract or wrongful discharge. 

B. Other Disciplinary Action Against Employees 
Disciplinary action other than termination may also be 
taken against an employee; temporary suspension and reprimand 
are examples. Whether or not such action is appropriate will 
of course depend upon the circumstances. These other forms of 
discipline basically are subject to the same legal 
requirements that are described above, except that "cause" is 
not usually required. 

A public employer contemplating taking some form of 
disciplinary action against an employee other than termination 
should first review all applicable personnel policies and/or 
collective bargaining agreements. In the case of state 
employees, the discipline-handling policies of the Department 
of Administration will apply, unless discipline handling is 
governed by a collective bargaining agreement. 



C. Layoffs (Reductions in Force) 

Generally. Layoff of employees usually occurs when the 

employer has insufficient funds to continue employing the 

employees. Layoffs (also called reductions in force, or RIF 

for short), are not disciplinary actions against employees, 

Abut are actions taken for financial reasons. 

- 141 - 



• 



Layoff Procedures. There are no statutes specifically 
governing the layoff of public employees. The usual laws 
regarding nondiscrimination, retaliation, etc., (see Chapter 6 
and part A of this chapter) will apply; i.e., an employee 
cannot be laid off for discriminatory or other reasons 
prohibited by the laws previously discussed in this chapter. 

Layoff of State Employees. In the case of state 
employees, certain procedures must be followed in accordance 
with policies adopted by the Department of Administration (a 
new policy was adopted in March, 1982 to replace an older 
policy) . The state RIF policy establishes criteria to be 
applied in determining who will be laid off, procedures for 
notifying employees affected, and procedures for 
reinstatement . 

D. Payment of Wages of Discharged Employees 
Under state law, if an employee is terminated for "cause" 
(see part A in this chapter for a definition of "cause"), he 
is not entitled to be paid any compensation for any services 
rendered after the last day of his termination. This law 
would seem to be a statement of the obvious, but makes it 
clear that an employee who works after he is legitimately 
fired is not entitled to be paid for that work. 

Another state law requires that all unpaid wages of any 
employee terminated from employment for cause must be paid im- 
mediately upon termination. 



142 



E. Blacklisting of Discharged Employees 
Statement of Reason for Discharge; Blacklisting. A state 
statute requires the employer, upon demand by a discharged 
employee, to give the employee a complete statement in writing 
of the reasons for his discharge. If the employer refuses to 
furnish the statement, the employer is then prohibited from 
furnishing any such statement to anyone else, or from "black- 
listing" in any way the employee, or preventing the discharged 
employee from getting a job elsewhere. 

If an employer blacklists a discharged employee, or in 
any way prevents or attempts to prevent the employee from 
being hired, the employer is liable for punitive (money) 
damages. Blacklisting is also a misdemeanor under the law. 



- 143 - 



APPENDICES 

APPENDIX A. PUBLIC EMPLOYERS IN MONTANA 145 

APPENDIX B. ADMINISTERING AGENCIES 147 

APPENDIX C. FORMS 155 

APPENDIX D. FEDERAL ACTS INCORPORATING DAVIS-BACON 

ACT BY REFERENCE 165 



144 - 



APPENDIX A 
^ PUBLIC EMPLOYERS IN MONTANA 

Note: This list is probably not exhaustive - - there may be 
other units of local government not listed. 

State Government 

All State Agencies 

University System 

Counties 

Municipalities (Incorporated Cities and Towns) 

City-County Governments 

School Districts 

Includes regular school districts, county high school 
districts, joint districts ( intercounty) , joint high 
school districts, consolidated school districts, and 
community college districts 

Special Districts 

^ Conservation districts 
Conservancy districts 
County water and sewer districts 
Forest fire protection districts 
Drainage districts 
Housing authorities 
Irrigation districts 
Public cemetary districts 
Public hospital districts 
Refuse disposal districts 
Regional airport authorities 
Television districts 
Urban transportation districts 

Subordinate Agencies 

County agencies 
County health units 
County planning districts 
District health units 
Fair districts 
Fire districts 
Herd districts 
Horse herd districts 
fe Livestock protective districts 



145 



Subordinate Agencies, cont. 

Local improvement districts 

Metropolitan sanitary or storm sewer districts 

Mosquito control districts 

Road districts 

Rural improvement districts 

Weed control and weed extermination districts 

Zoning Districts 

Municipal Agencies 

City parking commissions 
Municipal airport authorities 
Special improvement districts 
Urban renewal agencies 



- 146 - 



APPENDIX B 

ADMINISTERING AGENCIES 

fote: Questions relating to the topics covered by this hand- 
book should first be referred to the personnel officer, 
attorney, or other employment law specialist assigned 
to the public employer involved. If the questions re- 
main unanswered, then the agencies listed below may be 
contacted. This list is not comprehensive. In many 
instances, a subagency or agencies other than those 
listed may have a role in the administration of a 
particular law. However, contact with the agency 
listed usually will lead to the proper authority. 

CHAPTER 1 . 

Not applicable. (The Montana Attorney General's Office 
or the Labor Standards Division, Montana Department of 
Labor and Industry, may be contacted for questions 
relating to the general law discussed in this chapter.) 

CHAPTER 2. 

Veterans ' Preference 

State: Labor Standards Division 

Montana Department of Labor and Industry 
Capitol Station 
I Helena, Montana 59620 

(406) 449-5600 

Federal: U. S. Department of Labor 

Labor-Management Services Administration 
Federal Office Building 
1961 Stout Street 
Denver, Colorado 80294 
(303) 837-5061 

Disabled Civilians 

State: Rehabilitative Services Division 

Department of Social and Rehabilitation 

Services 
111 Sanders 

Helena, Montana 596 02 
(406) 449-2590 

Montana Labor — Public Works Contracts 

State: Labor Standards Division 

Montana Department of Labor and Industry 
Capitol Station 
Helena, Montana 59620 
i (406) 449-5600 



147 



Child Labor 



State: Labor Standards Division ( 

Montana Department of Labor and Industry 
Capitol Station 
Helena, Montana 59620 
(406) 449-5600 

Federal: U. S. Department of Labor 

Employment Standards Administration 
Federal Office Building 
1961 Stout Street 
Denver, Colorado 80294 
(303) 837-5903 

Nepotism 

State: Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 

Equal Employment 

(See Chapter 6) 

Miscellaneous 

State: Labor Standards Division 

Montana Department of Labor and Industry 
Capitol Station 
Helena, Montana 59620 
(406) 449-5600 

CHAPTER 3. 

Wages and Wage Protection 

State: Labor Standards Division 

Montana Department of Labor and Industry 
Capitol Station 
Helena, Montana 59620 
(406) 449-5600 

Federal: U. S. Department of Labor 

Employment Standards Administration 
Federal Office Building 
1961 Stout Street 
Denver, Colorado 80294 
(303) 837-5903 



• 



- 148 



# 



CHAPTER 4. 

Hours of Employment 



State: Labor Standards Division 

Montana Department of Labor and Industry 
Capitol Station 
Helena, Montana 59620 
(406) 449-5600 

or 

Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 



CHAPTER 5. 

Leave 



State Agencies 



State Personnel Division 
Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-3871 



Local Government: 

State Personnel Division 
Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-3871 

or 

Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 

Group Insurance 

State: State Personnel Division 

Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-3871 



- 149 - 



or 

Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 

Workers' Compensation 

State: Division of Workers' Compensation 
815 Front Street 
Helena, Montana 59620 
(406) 449-2047 

Unemployment Insurance 

State: Unemployment Insurance Division 
Capitol Station 
Helena, Montana 59620 
(406) 449-2723 

Retirement Systems 

State: Public Employees' Retirement Division 
Department of Administration 
1 71 2 Ninth Avenue 
Helena, Montana 59620 
(406) 449-3154 

Social Security and Income Tax Withholding 

State: Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-2032 

Federal: Local or Regional Social Security or In- 
ternal Revenue Service Office 



ERISA 



Federal: Pension Benefit Guaranty Corporation 
2020 K Street, NW 
Washington, D.C. 20006 
(202) 254-4817 

or 

U. S. Department of Labor 

Labor-Management Services Administration 
Federal Office Building 
1961 Stout Street 
Denver, Colorado 80294 
(303) 837-5061 



150 



• 



♦ 



OSHA 

State: Division of Workers' Compensation 
815 Front Street 
Helena, Montana 59620 
(406) 449-2047 

Federal: U. S. Department of Labor 

Occupational Safety and Health Adminis- 
tration 

Federal Office Building 
1961 Stout Street 
Denver, Colorado 80294 
(303) 837-3883 

Collective Bargaining 

State (Negotiations) : 

State Personnel Division 
Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-3871 

State (Appeals and Arbitration) : 

Personnel Appeals Division 
Montana Department of Labor and Industry 
Capitol Station 
Helena, Montana 59620 
(406) 449-5600 

Political Activity 

State: Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 

Federal: U. S. Civil Service Commission 
1900 E Street, NW 
Washington, D. C. 20415 
(202) 655-4000 

Personnel Policies 

State: State Personnel Division 

Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-3871 



• 



151 - 



CHAPTER 6 



Civil Rights 
State: 



Federal 



Equal Pay 

State: 



Federal 



or 



Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 



Human Rights Division 
Capitol Station 
Helena, Montana 59620 
(406) 449-2884 

Equal Employment Opportunity Commission 
2401 E Street, NW 
Washington, D. C. 20506 
(202) 634-7040 



Labor Standards Division 

Montana Department of Labor and Industry 
Capitol Station 

Helena, Montana 59620 a 

(406) 449-5600 

U. S. Department of Labor 
Employment Standards Administration 
Federal Office Building 
1961 Stout Street 
Denver, Colorado 80294 
(303) 837-5903 



Discrimination in Employment 

State (Appeals and Grievances) : 

Human Rights Division 
Capitol Station 
Helena, Montana 59620 
(406) 449-2884 

State (Compliance) : 

State Personnel Division 
Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-3871 



- 152 - 



• 



Federal: Equal Employment Opportunity Commission 
2401 E Street, NW 
Washington, D. C. 20506 
(202) 634-7040 

Maternity Leave 

State (Appeals and Grievances) : 

Human Rights Division 
Capitol Station 
Helena, Montana 59620 
(406) 449-2884 

State (Compliance) : 



Human Rights Division 
Capitol Station 
Helena, Montana 59620 
(406) 449-2884 



• 



CHAPTER 7. 

Discharge and Layoff 
State Agencies: 



State Personnel Division 
Department of Administration 
Sam W. Mitchell Building 
Helena, Montana 59620 
(406) 449-3871 



or 



Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 



Local Governments: 

Attorney General's Office 
Capitol Station 
Helena, Montana 59620 
(406) 449-2026 

Payment of Wages 

State: Labor Standards Division 

Montana Department of Labor and Industry 
Capitol Station 
Helena, Montana 59620 
(406) 449-5600 



153 - 



Blacklisting 



State: Labor Standards Division 

Montana Department of Labor and Industry ^^ 
Capitol Station 
Helena, Montana 59620 
(406) 449-5600 



154 



♦ 



APPENDIX C 
FORMS 



Note: The following forms can be obtained from the Montana 
Labor Standards Division, Capitol Station, Helena, Montana 
59620 (406) 449-5600. 



Application for a Certificate to Employ a Learner at 

Subminimum Wages 156 

Application for a Certificate to Employ a Student- 
Learner at Subminimum Wages 158 

Application for an Age Certificate 160 

Construction Contractor's Wage Protection Bond 161 

Restaurant, Bar and Tavern Wage Protection Fund Bond . . . 163 



• 



* 



155 



MONTANA DEPARTMENT OF LABOR & INDUSTRY 
Wage & Hour Section 
Labor Standards Division 
Capitol Station 
Helena, Montana 59620 

Application For A Certificate To Employ A Learner At 
Subminimum Wages 



l.Name & address including zip code 
of extablishment making application 


3a. Name & address of Learner 
Phone # 


Phone i- 


b.Date of Birth (Mo nth, Day, Year) 


2. Type of Business & Products manu- 
factured, sold, or services rendered 


4. Have you ever been employed as a 
learner? If so, what occupation? 


5. Proposed beginning date of 
employment (month , day , yea r \ 




16. Title of learner occupation 


A Has an order been placed for 
^P experienced workers at 

Employment Security Office 

V7ithin last 15 days? 




17. No. of employees in this 
establishment 




18. No. of experienced em- 
ployees in learner occu- 
pa t ion 




7. Are experienced workers 
available for these jobs? 




19. Minimum hourly wage rate 
of experienced workers in 
Item 18 for last payroll 
period 




8. Do any abnormal labor con- 
ditions exist in plant 
(strikes, lock outs, etc.) 




9. Has employer ever been found 
in violation of Wage and 
Hour Laws? 




20. Special Minimum Wage(s) to be paid 
Learner (if a progressive waqe 
schedule is proposed, enter each 
rate & specify the period during 
which it will be paid) must be at 
least. 8 5% of minimum wage 


10. How many learners have you j 
previously hired each year? 


11. Are learners available? 




12. Will learner be retained at 
end of training period? 




21. Is an age or employment certifi- 
cation on file in this establish- 
ment for this learner? 


13. Effective date of certifi- 
cate 




14. Expiration date c f certifi- 
cate 

m 




22. Annual Gross sales, exclusive of 
excise taxes 


^^5. No. of days of employment- 
training at special minimum 
wage 




$ 





156 



2 3. Previous work experience of learner lis tin; 
and type of work learner has done. 



employees names ami addres 



24. Outline Training On-The-Job (describe brief]. y 
t h e learner will be trained and list the type 



h ; v o r k process in w hie h 
of machines used). 



25. Signature of Learner: 

I have read the statements made above and ask that the requested 
certificate authorizing ray employment training at special minimum wages 
and under the conditions stated, be granted by the Commissioner or his 
authorized representative. 



Print or type name 



Sis nature of Learner 



Date 



6. Certification by Employer authorized representative: 

I certify, in applying for this certificate, that all of the foregoing 
statements are, to be best of my knowledge and belief, true and correct. 



Print name of employer 



Signature of employer or representative 



Title 



Date 



157 



Montana de?art>:i:;t or labor & industry 

Labor Standards Division 
Capitol Station 
Helena, Montana 59620 
Application For A Certificate To Employ A Student-Learner 
At Subminimum U'ages 





1. Name & address including zip cod< 

establishment making application 


>, of 


3A. Name & Address of Student-Learner 








B. Date of Birth: (Month, Day, Year) 






2. Type of Business (x Products Manufactured 
sold, or services rendered 


4. Name & Address, include zip code, of 

school in which student-learner enrolled 






5. Proposed Beginning Date of Empl- 
oyment (month, day, year) 




17. Title of student-learner occupation: 






6. Proposed Ending date of Empl- 
oyment (month, day, year) 




18. No. of employees in this 
establishment: 








19. No. of experienced empl- 
oyees in student-learner 

occupation. 




> 


< 


7. Proposed Graduation Date 
^ (Month, day, year) 








8. Number of weeks in school year 




20. Minimum hourly wage rate 
of experienced workers in 
Item 19. 








9. No. of school hrs. directly re-' 
lated to employment training 








21. Special Minimum Wage(s) to Be Paid 

Student-Learner (if a progressive wage 
schedule is proposed enter each rate & 
specify the period during which it will 
be paid) : 






10. Total Hrs. of school instr- 
uction per week. 








11. How is employment training 

scheduled? (weekly, alternate 
weeks, etc.) 






12. No. of weeks of employment 
Training at special minimum 
wages: 








13. No. hrs. of employment tra- 
ining a week. 








22. Is an age or employment certification on 
file in this establishment for this 
student-learner? 






14. Are Federal Vocational Ed 
ucation funds being used? 








23. Annual Gross sales, exclusive of excise 
Taxes: 

$ 






15. Was this program authorized 
by State Brd . of Vocational 
education 






1 


16. If Answer to rl5 is No give name of 
^ recognized educational body approving 
W this program: 









- 158 - 



24. Outline the school instruction directly related to the employment training (list 
courses, etc.) 



25. 



Outline Training On-The-Job (describe briefly the work process in which the student 
learner will be trained and list the types of machines used). 



26. 



Signature of Student-Learner : 

I have read the statements made above and ask that the requested certificate, 
authorizing my employment training at special minimum wages and under Jb.c con- 
ditions stated, be granted by the Commissioner or his authorized representative. 



Print or type name 



Signature of Student 



date 



27. Certification by School official: 

I certify that the student named here 
in will be receiving instruction in 
an accredited school and will be em- 
ployed pursuant to a bona fide vo- 
cational training program, as de- 
fined in section 4(a) & (g) of the 
regulations. 



Print name of official 



Signature of school official 



Title 



Date 



28. Certification by Employer authorized 
representative: 

I certify, in applying for this cert- 
ificate, that all of the foregoing 
statements are. to be best of my know- 
ledge and belief, true and correct. 



Print name of employer 



Signature of employer or representative 



Title 



date 



159 



STATE OF MONTANA 

DEPARTMENT OF LABOR AND INDUSTRY 

LABOR STANDARDS DIVISION 

CAPITOL STATION 
HELENA, MONTANA 59620 

Application for An Age Certificate 

BE FILLED OUT BY THE MINOR: 



D 

Cert 
Date 
Date 


o Not Use 

Nn. 


This 


Space 


Issued 






Returned 









1. Name 



2. Date of Birth 



(M(.nlh) 

3. Place of Birth 



(Day) 



(Ycar| 



Address. 
Age 



(Street) 



(County) 



(City) 

Sex_ 



(State) 



(City) 

4. Name of Parents/Legal Guardian 

5. Last School Grade Completed 

^k Evidence of age submitted: 

If possible, attach your birth certificate to this application as evidence of age. If it is impossible to obtain a birth 
certificate, attach your baptismal certificate or other documentary evidence, such as an insurance policy at least 
one year old. or an old family Bible record, or a passport, or a doctor's statement of age, or parents' affidavit, or 
school record. This evidence will be returned to you, or your employer, when the certificate is issued. 



Date 



(Signature of Minor Applicant) 



TO BE FILLED OUT BY EMPLOYER: 

I intend to employ the above named minor to work as 



at a wage of $. 



(Occupation — Uive Exact Duties) 

per hour, for hours per week. 



( Industry ol Employer) 

He will be employed days per week, from A.M. to P.M. with hours off 

for lunch or rest period. 

Period to be employed (check item that applies); 

Full time [ Before and after school [ during vacation [ 



» 



(Signature of Employer) 



(Address of Employer) 

Complete only one application per minor— no duplicate copy necessary. 

- 160 - 



STATE OF MONTANA 

DEPARTMENT OF LABOR AND INDUSTRY 

CONSTRUCTION CONTRACTOR'S WAGE PROTECTION BOND 

We, (contractor) of 

, (business address) as 

principal, and (surety) of 

, (business address) 

individuals/a corporation or corporations incorporated under the laws 

of the State of , as surety, are firmly bound and are 

indebted to the State of Montana in the sum of 



Dollars ($ ) for which payment we bind ourselves 

and our legal representatives and successors, jointly and severally. 

The condition of this obligation is that the principal is engaged 
in the construction business and is required by the provisions of the 
Montana Contractor's Bond for Wages and Benefits Act, Section 39-3-701, 
et. seq. , MCA, to furnish a bond on the terms and conditions which are 
set forth in that Act. 

This bond is intended to comply with the requirements of the 
Montana Contractors' Bond for Wages and Benefits Act, Section 39-3-701, 
et. seq. , MCA, and in accordance with the provisions and requirements 
of that act, it is expressly provided that: 

1. Any employee or former employee of the principal may bring 
an action on this surety bond in his own name for unpaid wages and 
fringe benefits. 

2. The Commissioner, Department of Labor and Industry, State of 
Montana, through his authorized agents, or the trustee of any trust 
maintained for the benefit of the employees of the principal may bring 

Ian action on this surety bond on behalf of employees or former employee; 
pf the principal. 

3. The total aggregate liability of the surety shall be limited 
to the sum of Dollars ($ ) 

4. This bond shall be deemed continuous in form and shall 
remain in full force and effect unless terminated or cancelled in the 
manner hereinafter provided in this agreement. 

5. The State of Montana, acting through the Commissioner, 
Department of Labor and Industry, or his authorized agents, reserves 
the right, at any time to require a new bond or a bond of greater 
amount than this bond or to require another or other surety or sureties 
be provided whenever the Commissioner or his agents deem it necessary 
to comply with the provisions of the Montana Contractors' Bond for 
Wages and Benefits Act, Section 39-3-701, et. seq., MCA, to terminate 
this bond, except as to any liability already incurred or accrued 
hereunder, by written notice of such termination to the principal and 
surety delivered or mailed by certified or registered mail. On 
expiration of the period designated in such notice, which period shall 
be not less than 30 days from the date the notice was mailed, this 
bond shall terminate and be of no further force or effect except as to 
any liability incurred or accrued prior to such termination. 

6. Surety may cancel this bond and be relieved of further 
liability under the bond by giving 30 days written notice to the 
Commissioner, Department of Labor and Industry, Labor Standards 
Division, Capitol Station, Helena, Montana 59620, but such cancel- 
lation shall not affect any liability incurred or accrued hereunder 

^rior to the termination of the notice period. 



161 



7. In the event the principal and surety, or either of them, is 
served with notice of any action brought against the principal and/or 
surety under this bond, written notice of the filing of such action 
shall be immediately given by principal and/or surety, as each is 
served with notice of action, to the Commissioner, Department of Labor 
and Industry, Labor Standards Division, Capitol Station, Helena, 
Montana 59620. 

In witness whereof, the parties have executed this bond this 
day of , 19 



PRINCIPAL (CONTRACTOR) 



By: 
Its 



Subscribed and sworn to before me this day of 

, 19 



Notary Public for the 

State of Montana 

My Commission expires 



SURETY 



By: 

Its: 



Subscribed and sworn to before me this day of 

, 19 



Notary Public for the 

State of Montana 

My Commission expires 



LSD00:A 



- 162 



STATE OF MONTANA 

RESTAURANT, BAR AND TAVERN WAGE PROTECTION FUND BOND 

KNOW ALL MEN BY THESE PRESENTS; that we (Lessee), 



of Located at_ 



(Name of Establishment) (Address) (City) (County) 

hereinafter called the Principal and (Surety or Sureties) 

individuals/ a corporation or corporations licensed under the laws of the State of Montana, hereinafter called 

the Surety or Sureties, are held and firmly bound unto the State of Montana in the full and just sum of 



. ($ . ) lawful money of the United States of America to be paid to 

the State of Montana or its assigns as Trustee of the Restaurant, Bar and Tavern Wage Protection Fund, to which payment 
well and truly to be made and done, we bind ourselves, heirs, executors, administrators and successors, jointly, several- 
ly, firmly by these presents. 

WHEREAS, the above bonded "Principal" has leased or desires to lease a premise to be used as the place for conduc- 
ting a restaurant, bar or tavern business, where the equipment, appliances and other accessories necessary for the con- 
duct of business therein are owned by other than this "Principal," AND 

|A WHEREAS, it is one of the conditions of entering into said lease that pursuant to statute these presents be executed; 

NOW THEREFORE, the condition of this obligation is such that if the above bonded "Principal" as Lessee shall in all 
respects comply with all the laws of the State of Montana under the provisions of the Restaurant, Bar and Tavern Wage 
Protection Act, CHAPTER NO. 155, MONTANA SESSION LAWS 1965, and any and all amendments and supplements 
thereto, then this obligation shall be null and void, otherwise to remain in full force and effect, subject, however, to the 
following conditions: 

1. That the Lessee shall at all time keep this bond in full force and effect and any cancellation or revocation of this 
bond or withdrawal of the Surety or Sureties therefrom shall automatically revoke and suspend the certificate issued to the 
Lessee as provided in Section 9 of the Restaurant, Bar and Tavern Wage Protection Act until such time as a new bond of 
like tenure and effect shall have been filed and approved as provided in that Act. 

2. That should the above bonded "Principal" as Lessee cease operation of business, for any reason, and is unable 
to pay the wages due and owing the employees then the proceeds of this bond shall be used pursuant to the Restaurant 
Bar and Tavern Wage Protection Act to pay the wages due and owing the employees of the Lessee, and the Surety or Sure- 
ties shall be liable pursuant to this bond for the amount of such wages due and owing. 

3. That the Commissioner of Labor and Industry may require a new bond or a bond of a greater amount than this 
bond whenever the Commissioner deems it necessary for the protection of the employees of the Lessee. 

(continued) 



- 163 



4. That the Commissioner of Labor and Industry may, after due notice given, discharge the existing Surety or Sure- 
ties from further liability and require that another or other Surety or Sureties be provided. 

Sealed with our respective seals and dated this _Day of , 19 

WITNESSES: PRINCIPAL: 



Surety or Sureties: 



By- 



Attorney-in-fact (Seal) 

(SEAL) 

Subscribed and sworn to before me this day of , 19 



(Notary Public for Montana) 



164 - 



APPENDIX D 



FEDERAL ACTS INCORPORATING DAVIS-BACON ACT BY REFERENCE 
(as of October 5, 1972) 



1. The Davis-Bacon Act (sees. 1-7,46 Stat. 
1494, as amended; Pub. L. 74-403, 40 U.S.C. 
276a-276a-7). 

2. National Housing Act (sec. 212 added to 
c. 847, 48 Stat. 1246, by sec. 14, 53 Stat. 807; 
12 U.S.C. 1715c and repeatedly amended). 

3. Housing Act of 1950 (college housing) 
(amended by Housing Act of 1959 to add 
labor provisions, 73 Stat. 681; 12 U.S.C. 
1749a(f)). 

4. Housing Act of 1959 (sec. 401(f) of the 
Housing Act of 1950 as amended by Pub. L. 
86-372, 73 Stat. 681; 12 U.S.C. 1701q(c)(3)). 

5. Commercial Fisheries Research and De- 
velopment Act of 1964 (sec. 7, 78 Stat. 199; 
16 U.S.C. 779e(b)). 

6. Library Services and Construction Act 
(sec. 7(a), 78 Stat. 13; 20 U.S.C. 355c(a)(4), as 
amended). 

M. National Technical Institute for the 
■kf Act (sec. 5(b)(5), 79 Stat. 126; 20 U.S.C. 
u34(b)(5)). 

8. National Foundation on the Arts and 
Humanities Act of 1965 (sec. 5(k), 79 Stat. 
846 as amended; 20 U.S.C. 954(j)). 

9. Elementary and Secondary Education 
Act of 1965 as amended by Elementary and 
Secondary and other Education Amend- 
ments of 1969 (sec. 423 as added by Pub. L. 
91-230, title IV, sec. 401(a)(10), 84 Stat. 169, 
and renumbered sec. 433, by Tab. L. 92-318; 
title III, sec. 301(a)(1), 86 Stat. 326; 20 
U.S.C. 1232(b)). Under the amendment cov- 
erage is extended to all programs adminis- 
tered by the Commissioner of Education. 

10. The Federal-Aid Highway Act of 1956 
(sec. 108(b), 70 Stat. 378, recodified at 72 
Stat. 895; 23 U.S.C. 113(a), as amended), see 
particularly the amendments in the Feder- 
al-Aid Highway Act of 1968 (Pub. L. 90-495, 
62 Stat. 815). 

11. Indian Self -Determination and Educa- 
tion Assistance Act (sec. 7, 88 Stat. 2205; 25 
U.S.C. 450e). 

12. Indian Health Care Improvement Act 
(sec. 303(b), 90 Stat. 1407; 25 U.S.C. 
1633(b)). 

13. Rehabilitation Act of 1973 (sec. 
j^(b)(5), 87 Stat. 384, 29 U.S.C. 776(b)(5)). 



14. Comprehensive Employment and 
Training Act of 1973 (sec. 606, 87 Stat. 880, 
renumbered sec. 706 by 88 Stat. 1845; 29 
U.S.C. 986; also sec. 604, 88 Stat. 1846; 29 
U.S.C. 964(b)(3)). 

15. State and Local Fiscal Assistance Act 
of 1972 (sec. 123(a)(6), 86 Stat. 933; 31 
U.S.C. 1246(a)(6)). 

16. Federal Water Pollution Control Act 
(sec. 513 of sec. 2, 86 Stat. 894; 33 U.S.C. 
1372). 

17. Veterans Nursing Home Care Act of 
1964 (78 Stat. 502, as amended; 38 U.S.C. 
5035(a)(8)). 

18. Postal Reorganization Act (sec. 
410(b)(4)(C); 84 Stat. 726 as amended; 39 
U.S.C. 410(b)(4)(C)). 

19. National Visitors Center Facilities Act 
of 1968 (sec. 110, 32 Stat. 45; 40 U.S.C. 808) 

20. Appalachian Regional Development 
Act of 1965 (sec. 402, 79 Stat. 21; 40 U.S.C 
App. 402). 

21. Health Services Research, Health Sta 
tistics, and Medical Libraries Act of 1974 
(sec. 107, see sec. 308(h)(2) thereof, 88 Stat 
370, as amended by 90 Stat. 378; 42 U.S.C 
242m(h)(2)). 

22. Hospital Survey and Construction Act 
as amended by the Hospital and Medical Fa 
cilities Amendments of 1964 (sec. 605(a)(5) 
78 Stat. 453; 42 U.S.C. 291e(a)(5)). 

23. Health ^Professions Education Assist 
ance Act (sec. 303(b), 90 Stat. 2254; 42 U.S.C 
293a(g)(l)(C); also sec. 308a, 90 Stat. 2256 
42 U.S.C. 293a(c)(7)). 

24. Nurse Training Act of .1964 (sec 
941(a)(1)(C), 89 Stat. 364; 42 U.S.C 
296a(b)(5)). 

25. Heart Disease, Cancer, and Stroke 
Amendments of 1965 (sec. 904, as added by 
sec. 2, 79 Stat. 928; 42 U.S.C. 299d(b)(4)). 

26. Safe Drinking Water Act (sec. 2(a), see 
sec. 1450e thereof, 88 Stat. 1691; 42 U.S.C. 
300j-9(e)). 

27. National Health Planning and Re- 
sources-Act (sec. 4, see sec. 1604(b)(1)(H), 88 
Stat. 2261, 42 U.S.C. 300o-3(b)(l)(H)). 

28. U.S. Housing Act of 1937, as amended 
and recodified (88 Stat. 667; 42 U.S.C. 
1437 j). 



- 165 - 



29. Demonstration Cities and Metropoli- 
tan Development Act of 1966 (sees. 110, 311, 
503. 1003, 80 Stat. 1259, 1270, 1277, 1284; 42 
U.S.C. 3310: 12 U.S.C. 1715c; 42 U.S.C. 
1437J). 

30. Slum clearance proerarr Housing Act 
of 1949 (sec. 109, 63 Stat.' 419, as amended; 
42 U.S.C. 1459). 

31. Farm housing: Housing Act of 1964 
(adds sec. 516(f) to Housing Act of 1949 by 
s~c. 503, 78 Stat. 797; 42 U.S.C. 1486(f)). 

32. Housing Act of 1961 (sec. 707, added by 
sec. 907, 79 Stat. 496, as amended; 42 U.S.C. 
1500C-3). 

33. Defense Housing and Community Fa- 
cilities and Services Act of 1951 (sec. 310, 65 
Stat. 307; 42 U.S.C. 1592i). 

34. Special Health Revenue Sharing Act 
of 1975 (sec. 303. see sec. 222(a)(5) thereof, 
89 Stat. 324; 42 U.S.C. 2689j(a)(5)). 

35. Economic Opportunity Act of 1964 
(sec. 607, 78 Stat. 532; 42 U.S.C. 2947). 

36. Headstart, Economic Opportunity, and 
Community Partnership Act of 1974 (sec. 
11. see sec. 811 thereof, 88 Stat. 2327; 42 
U.S.C. 2992a). 

37. Housing and Urban Development Act 
of 1965 (sec. 707, 79 Stat. 492 as amended; 42 
U.S.C. 3107). 

38. Older Americans Act of 1965 (sec. 502, 
Pub. L. 89-73, as amended by sec. 501, Pub. 
L. 93-29; 87 Stat. 50; 42 U.S.C. 3041a(a)(4)). 

39. Public Works and Economic Develop- 
ment Act of 1965 (sec. 712, 79 Stat. 575 as 
amended; 42 U.S.C. 3222). 

40. Juvenile Delinquency Prevention Act 
(sec. 1, 86 Stat. 536; 42 U.S.C. 3884). 

41. New Communities Act of 1968 (sec. 
410, 82 Stat. 516; 42 U.S.C. 3909). 

42. Urban Growth and New Community 
Development Act of 1970 (sec. 727(f), 84 
Stat. 1803; 42 U.S.C. 4529). 

43. Domestic Volunteer Service Act of 
1973 (sec. 406, 87 Stat. 410; 42 U.S.C. 5046). 

44. Housing and Community Development 
Act of 1974 (sees. 110, 802(g), 88 Stat. 649, 
724; 42 U.S.C. 5310, 1440(g)). 

45. Developmental^ Disabled Assistance 
and Bill of Rights Act (sec. 126(4), 89 Stat. 
488; 42 U.S.C. 6042(4); title I, sec. ill, 89 
Stat. 491; 42 U.S.C. 6063(b)(19)). 

46. Public Works Employment Act of 1976 
(sec. 109. 90 Stat. 1001; 42 U.S.C. 6708; also 
sec. 208. 90 Stat. 1008; 42 U.S.C. 6728). 

47. Energy Conservation and Production 
Act (sec. 451(h), 90 Stat. 1168; 42 U.S.C. 
6881(h)). 

48. Solid Waste Disposal Act (sec. 2, 9C 
Stat. 2828; 42 U.S.C. 6979). 

49. Rail Passenger Service Act of 1970 
(sec. 405d, 84 Stat. 1337; 45 U.S.C. 565(d)). 



50. Urban Mass Transportation Act of 

1964 (sec. 10, 78 Stat. 307; renumbered se" 
13 by 88 Stat. 715; 49 U.S.C. 1609). A 

51. Highway speed ground transportatP 
study (sec. 6(b), 79 Stat. 893; 49 U.S.C. 
1636(b)). 

52. Airport and Airway Development Act 
of 1970 (sec. 22(b), 84 Stat. 231; 49 U.S.C. 
1722(b)). 

53. Federal Civil Defense Act of 1950 (50 
U.S.C. App. 2281i). 

C4. National Capital Transportation Act of 

1965 (sec. 3(b)(4), 79 Stat. 644; 40 U.S.C. 
682(b)(4). 

Note.— Repealed Dec. 9, 1969 and labor 
standards incorporated in sec. 1-1431 of the 
District of Columbia Code). 

55. Model Secondary School for the Deaf 
Act (sec. 4, 80 Stat. 1027, Pub. L. 89-694, but 
not in the United States Code). 

56. Delaware River Basin Compact (sec. 
15.1. 75 Stat. 714, Pub. L. 87-328) (consid- 
ered a statute for purposes of the plan but 
not in the United States Code). 



166 



I 



STATUTES AND RULES 



The following is a compilation of laws and rules most 
often needed in connection with this handbook. Some 
laws and rules are not included due to space 
limitations. For example, the state rules relating to 
minimum wages and overtime compensation are not 
included. State rules not included may be obtained at 
any Clerk and Recorder's office, the Montana Secretary 
of State's office, or at most libraries. They are 
contained in the Administrative Rules of Montana (ARM) . 
The Labor Standards Division of the Montana Department 
of Labor and Industry may also be contacted for 
references to or copies of pertinent laws and rules not 
contained herein. 



167 - 






52 ° -• 



STATUTES AND RULES 
Index 

Subject Page 

STATE STATUTES 

(See the index at the beginning of each major 
subject heading listed below for a more spec- 
ific index of sections within that subject.) 

The Employment Relationship 170 

General Provisions 

General Obligations of Employers 

General Prohibitions on Employers 

General Obligations of Employees 

Termination of Employment 

Master and Servant 

General Liability Arising from Employment 

Relationship 
Blacklisting and Protection of Discharged 

Employees 

Wages and Wage Protection 179 

General Provisions 

Payment of Wages 

Minimum Wage and Overtime Compensation 

Restaurant, Bar, and Tavern Wage Protection Act 

Contractors' Bonds of Wages and Benefits 

Hours of Labor in Certain Employments 192 

Hours of Labor - Penalties and Liability for 
Violations Thereof 

Women in Employment 194 

Duties of Department of Labor and Industry 

State Employee Classification, Compensation, and 

Benefits 196 

Leave Time (Holidays, Sick Leave, Annual 
Leave, Military Leave, Jury Duty) 

Construction Contracts 202 

Special Conditions — Labor (Prevailing 
Wages, Preference of Montana Labor) 

Child Labor 206 

Prohibited Employment of Children 

Veterans 208 

Veterans ' Employment and Re-employment 
Preference 



- 168 - 



Basic Rights 214 

Basic Personal Rights 
Basic Political Rights 

Illegal Discrimination 216 

General Provisions 
Commission for Human Rights 

Prohibited Discriminatory Practices (Employ- 
ment, Maternity Leave . etc.) 
Exceptions to Prohibitions 
Enforcement by Commission 
Penalties 

Governmental Code of Fair Practices 227 

General Provisions 

Duties of Governmental Agencies and Officials 

Enforcement and Remedies 

Rights of the Handicapped 235 

Discrimination in Employment 
Rights of the Physically Disabled 

Nepotism 236 



FEDERAL STATUTES 

Fair Labor Standards Act (FLSA) 239 

Davis-Bacon Act (Prevailing Wage Law) 279 



FEDERAL RULES 

Payment and Reporting of Wages on Public Works 

Projects 282 

Labor Standards Provisions on Public Works Projects . . 289 



169 - 



THE EMPLOYMENT RELATIONSHIP 

Part 1 -- General Provisions 

Section 

39-2-101. Employment defined. 

39-2-102. What belongs to employer. 

39-2-103. Confidential employment. 

Part 2 -- General Obligations of Employers 
39-2-201. Seats for employees. 

Part 3 -- General Prohibitions on Employers 

39-2-301. Unlawful for employer to require employee to pay 

cost of medical examination as condition of 

employment. 
39-2-302. Discharge or layoff of employee because of 

attachment or garnishment prohibited. 
39-2-303. Deception as to character of employment, 

conditions of work, or existence of labor 

dispute prohibited. 
39-2-304. Lie detector tests prohibited -- exception. 
39-2-305. Employment of aliens not lawfully authorized to 

accept employment prohibited. 
39-2-306. Employment of persons under eighteen as 

bartenders prohibited. 

Part 4 -- General Obligations of Employees 

39-2-401. Duties of gratuitous employee. 

39-2-402. Duties of employee for reward. 

39-2-403. Duties of employee for his own benefit. 

39-2-404. Employee must obey employer. 

39-2-405. Employee must conform to usage. 

39-2-406. Degree of skill required. 

39-2-407. Duty to account. 

39-2-408. Duty of employee regarding items received on 

account of his employer. 

39-2-409. Preference to be given to employer's business. 

39-2-410. Responsibility of employee for substitute. 

39-2-411. Surviving employee. 

Part 5 -- Termination of Employment 

39-2-501. Termination of employment generally. 

39-2-502. Termination by death or incapacity of employer. 

39-2-503. Termination at will. 

39-2-504. Termination by employer for fault. 

39-2-505. Termination by employee for fault. 



- 170 - 



Part 6 -- Master and Servant 

39-2-601. Servant defined. 

39-2-602. Term of hiring. 

39-2-603. Renewal of hiring. 

39-2-604. Time of service. 

39-2-605. Servant to pay over without demand 

39-2-606. When servant may be discharged. 



Part 7 -- General Liability Arising 
From Employment Relationship 

39-2-701. Indemnification of employee. 

39-2-702. Liability of employee for negligence. 

39-2-703. Liability of railway corporation for negligence 

of fellow servants. 
39-2-704. Liability of mining company for negligence of 

fellow servants. 
39-2-705. Contract discharging employer liability for 

negligence void. 



Part 8 -- Blacklisting and Protection 
of Discharged Employees 

39-2-801. Employee to be furnished on demand with reason 

for discharge. 
39-2-802. Protection of discharged employees. A 

Blacklisting prohibited. m 



39-2-803 



39-2-804. Violation of part a misdemeanor. 



39-2-101. Employment defined. The contract of 
employment is a contract by which one, who is called the 
employer, engages another, who is called the employee, to do 
something for the benefit of the employer or a third person. 

39-2-102. What belongs to employer. Everything which 
an employee acquires by virtue of his employment, except the 
compensation, if any, which is due to him from his employer, 
belongs to the latter, whether acquired lawfully or 
unlawfully or during or after the expiration of the term of 
his employment. 

39-2-103. Confidential employment. The obligations 
peculiar to confidential employments are defined in the laws 
relating to trusts and fiduciary relationships. 

39-2-201. Seats for employees. (1) Every employer in 
any manufacturing, mechanical, or mercantile establishment; 
laundry, hotel, or restaurant; "or other establishment 
employing any person shall provide suitable seats for all 
employees and shall permit them to use such seats when they 



- 171 - 



are not employed in the active duties of their employment. 
(2) Any employer who shall fail, neglect, or refuse to 
provide suitable seats, as provided in this section, or who 
shall permit or suffer any overseer, superintendent, or 
other agent of any such employer to violate any of the 
provisions of this section shall be guilty of a misdemeanor 
and upon conviction thereof shall be fined for each offense 
not less than $50 or more than $200 or be imprisoned in the 
county jail for a period of not less than 10 or more than 60 
days or both such fine and imprisonment. 

39-2-301. Unlawful for employer to require employee to 
pay cost of medical examination as condition of employment. 
(1) It shall be unlawful for any employer to require any 
employee or applicant for employment to pay the cost of a 
medical examination or the cost of furnishing any records of 
such examination as a condition of employment. 

(2) The term "employer", as used in this section, 
shall mean and include an individual, a partnership, an 
association, a corporation, a legal representative, trustee, 
receiver, trustee in bankruptcy, and any common carrier by 
rail, motor, water, air, or express company doing business 
in or operating within the state. 

(3) The term "employee", as used in this section, 
shall mean and include any person who may be permitted, 
required, or directed by any employer, as defined in 
subsection (2) of this section, in consideration of direct 
or indirect gain or profit to engage in any employment. 

(4) Any employer violating the provisions of this 
section shall be guilty of a misdemeanor and upon conviction 
thereof shall be punished by a fine in any sum not exceeding 
$100 for each such offense. 

39-2-302. Discharge or layoff of employee because of 
attachment or garnishment prohibited. No employer shall 
discharge or lay off an employee because of attachment or 
garnishment served on the employer against the wages of the 
employee . 

39-2-303. Deception as to character of employment, 
conditions of work, or existence of labor dispute 
prohibited. (1) No one doing business in this state shall 
induce, influence, persuade, or engage workmen to change 
from one place to another in this state through or by means 
of deception, misrepresentation, or false advertising 
concerning the kind or character of the work, the sanitary 
or other conditions of employment, or as to the existence of 
a strike or other trouble pending between the employer and 
the employees at the time of or immediately prior to such 
engagement. Failure to state in any advertisement, proposal, 
or contract for the employment of workmen that there is a 
strike, lockout, or other labor trouble at the place of the 
proposed employment when in fact such strike, lockout, or 
other trouble then actually exists at such place shall be 
deemed a false advertisement and misrepresentation for the 
purpose of this section. 

(2) Any workman influenced, induced, persuaded, or 



172 



engaged through or by means of any of the things prohibited 
by subsection (1) of this section has a right of action for 
recovery of all damages that he had sustained in consequence 
of the deception, misrepresentation, or false advertising 
used to induce him to change his place of employment against 
anyone directly or indirectly procuring such change, and in 
addition thereto, he shall recover reasonable attorneys' 
fees to be fixed by the court and taxed as costs in any 
judgment recovered. 

39-2-304. Lie detector tests prohibited -- exception. 
(1) No person, firm, corporation, or other business entity 
or representative thereof shall require as a condition for 
employment or continuation of employment any person to take 
a polygraph test or any form of a mechanical lie detector 
test. A person who violates this section is guilty of a 
misdemeanor. 

(2) This section shall not apply to public law 
enforcement agencies. 

39-2-305. Employment of aliens not lawfully authorized 
to accept employment prohibited. (1) No employer may 
knowingly employ an alien who is not lawfully authorized to 
accept employment. 

(2) A person convicted of violating this section shall 
be fined no more than $300. 

(3) The department of labor and industry or a person 
harmed by a violation of this section may sue to enjoin an 
employer from violating this section and to gain other 
appropriate relief. 

39-2-306. Employment of persons under eighteen as 
bartenders prohibited. (1) No person under 18 years of age 
shall be employed as a bartender, waiter, or waitress whose 
duty is to serve customers purchasing liquors, beer, or 
wines in any establishment which sells liquors, beer, or 
wines at retail. 

(2) Any retail vendor of liquors, beer, or wines who 
employs any such person under the age of 18 years is guilty 
of a misdemeanor. 

39-2-401. Duties of gratuitous employee. ( 1 ) One who 
without consideration undertakes to do a service for another 
is not bound to perform the same, but if he actually enters 
upon its performance, he must use at least slight care and 
diligence therein. 

(2) One who by his own special request induces another 
to entrust him with the performance of a service must 
perform the same fully. In other cases, one who undertakes 
a gratuitous service may relinquish it at any time. 

(3) A gratuitous employee who accepts a written power 
of attorney must act under it so long as it remains in force 
or until he gives notice to his employer that he will not do 
so . 

39-2-402. Duties of employee for reward. One who for a 
good consideration agrees to serve another must perform the 



173 



service and must use ordinary care and diligence therein so 
long as he is thus employed. 

39-2-403. Duties of employee for his own benefit. One 
who is employed at his own request to do that which is more 
for his own advantage than for that of his employer must use 
great care and diligence therein to protect the interest of 
the latter. 

39-2-404. Employee must obey employer. An employee 
must substantially comply with all the directions of his 
employer concerning the service on which he is engaged, 
except where such obedience is impossible or unlawful or 
would impose new and unreasonable burdens upon the employee. 

39-2-405. Employee must conform to usage. An employee 
must perform his service in conformity to the usage of the 
place of performance unless otherwise directed by his 
employer or unless it is impracticable or manifestly 
injurious to his employer to do so. 

39-2-406. Degree of skill required. (1) An employee is 
bound to exercise a reasonable degree of skill unless his 
employer has notice before employing him of his want of 
skill. 

(2) An employee is always bound to use such skill as 
he possesses, so far as the same is required, for the 
service specified. 

39-2-407. Duty to account. An employee must, on 
demand, render to his employer as often as may be reasonable 
just accounts of all his transactions in the course of his 
service and must, without demand, give prompt notice to his 
employer of everything which he receives for his account. 

39-2-408. Duty of employee regarding items received on 
account of his employer. An employee who receives anything 
on account of his employer in any capacity other than that 
of a mere servant is not bound to deliver it to him until 
demanded and is not at liberty to send it to him from a 
distance, without demand, in any mode involving greater risk 
than its retention by the employee himself. 

3 9-2-409. Preference to be given to employer's 
business . An employee who has any business to transact on 
his own account similar to that entrusted to him by his 
employer must always give the latter the preference. 

39-2-410. Responsibility of employee for substitute. 
An employee who is expressly authorized to employ a 
substitute is liable to his principal only for want of 
ordinary care in his selection. The substitute is directly 
responsible to the principal. 

39-2-411. Surviving employee. Where service is to be 
rendered by two or more persons jointly and one of them 
dies, the survivor must act alone if the service to be 



174 



rendered is such as he can rightly perform without the aid 
of the deceased person, but not otherwise. 

39-2-501. Termination of employment generally. Every A 
employment is terminated by: 

(1) the expiration of its appointed term; 

(2) the extinction of its subject; 

(3) the death of the employee; or 

(4) his legal incapacity to act as such. 

39-2-502. Termination by death or incapacity of 
employer. (1) Every employment in which the power of the 
employee is not coupled with an interest in its subject is 
terminated by notice to him of: 

(a) the death of the employer; or 

(b) his legal incapacity to contract. 

(2) An employee, unless the term of his service has 
expired or unless he has a right to discontinue it at any 
time without notice, must continue his service after notice 
of the death or incapacity of his employer, so far as is 
necessary to protect from serious injury the interests of 
the employer's successor in interest, until a reasonable 
time after notice of the facts has been communicated to such 
successor. The successor must compensate the employee for 
such service according to the terms of the contract of 
employment . 

39-2-503. Termination at will. An employment having no 
specified term may be terminated at the will of either party ▲ 
on notice to the other, except where otherwise provided by ™ 
this chapter, 28-10-301 through 28-10-303, 28-10-502, 
30-11-601 through 30-11-605, and 39-2-302. 

39-2-504. Termination by employer for fault. An 
employment, even for a specified term, may be terminated at 
any time by the employer in case of any willful breach of 
duty by the employee in the course of his employment or in 
case of his habitual neglect of his duty or continued 
incapacity to perform it. 

39-2-505. Termination by employee for fault. An 
employment, even for a specified term, may be terminated by 
the employee at any time in case of any willful or permanent 
breach of the obligations of his employer to him as an 
employee . 

39-2-601. Servant defined. A servant is one who is 
employed to render personal service to his employer 
otherwise than in the pursuit of an independent calling and 
who in such service remains entirely under the control and 
direction of the latter, who is called his master. 

39-2-602. Term of hiring. (1) A servant is presumed to 
have been hired for such length of. time as the parties adopt 
for the estimation of wages. A hiring at a yearly rate is A 
presumed to be for 1 year; a hiring at a daily rate, for 1 
day; a hiring by piecework, for no specified term. 



-175 - 



(2) In the absence of any agreement or custom as to 
the term of service, the time of payment, or rate or value 
of wages, a servant is presumed to be hired by the month at 
a monthly rate of reasonable wages, to be paid when the 
service is performed. 

39-2-603. Renewal of hiring. Where, after the 
expiration of an agreement respecting the wages and the term 
of service, the parties continue the relation of master and 
servant, they are presumed to have renewed the agreement for 
the same wages and term of service. 

39-2-604. Time of service. The entire time of a 
domestic servant belongs to the master, and the time of 
other servants to such extent as is usual in the business in 
which they serve, not exceeding in any case 10 hours in the 
day. 

39-2-605. Servant to pay over without demand. A 
servant must deliver to his master without demand, as soon 
as with reasonable diligence he can find him, everything 
that he receives for his account, but he is not bound 
without orders from his master to send anything to him 
through another person. 

39-2-606. When servant may be discharged. A master may 
discharge any servant, other than an apprentice, whether 
engaged for a fixed term or not: 

(1) if he is guilty of misconduct in the course of his 
service or of gross immorality, though unconnected with the 
same; or 

(2) if, being employed about the person of his master 
or in a confidential position, the master discovers that he 
has been guilty of misconduct before or after the 
commencement of his service of such a nature that, if the 
master had known or contemplated it, he would not have so 
employed him. 

39-2-701. Indemnification of employee. (1) An employer 
must indemnify his employee, except as prescribed in 
subsection (2) of this section, for all that he necessarily 
expends or loses in direct consequence of the discharge of 
his duties as such or of his obedience to the directions of 
the employer, even though unlawful, unless the employee at 
the time of obeying such directions believed them to be 
unlawful . 

(2) An employer is not bound to indemnify his employee 
for losses suffered by the latter in consequence of the 
ordinary risks of the business in which he is employed. 

(3) An employer must in all cases indemnify his 
employee for losses caused by the former's want of ordinary 
care . 

39-2-702. Liability of employee for negligence. An 
employee who is guilty of a culpable aegree of negligence is 
liable to his employer for the damage thereby caused to the 
latter, and the employer is liable to him for the value of 



176 



such services only as are properly rendered if the service 
is not gratuitous. 

39-2-703. Liability of railway corporation for 
negligence of fellow servants. (1) Every person or 
corporation operating a railway or railroad in this state is 
liable for all damages sustained by any employee of such 
person or corporation in consequence of the neglect of any 
other employee thereof or by the mismanagement of any other 
employee thereof and in consequence of the willful wrongs, 
whether of commission or omission, of any other employee 
thereof when such neglect, mismanagement, or wrongs are in 
any manner connected with the use and operation of any 
railway or railroad on or about which he is employed. No 
contract which restricts such liability is legal or binding. 

(2) In case of the death of any such employee in 
consequence of any injury or damage so sustained, the right 
of action provided by subsection (1) shall survive and may 
be prosecuted and maintained by his heirs or personal 
representatives . 

(3) Every railway corporation doing business in this 
state, including electric railway corporations, is liable 
for damages sustained by an employee thereof within this 
state, subject to the provisions of 27-1-702, when such 
damages are caused by the negligence of any train 
dispatcher, telegraph operator, superintendent, master 
mechanic, yardmaster, conductor, engineer, motorman, or any 
other employee who has superintendence of any stationary or 
hand signal. 

(4) No contract of insurance, relief, benefit, or 
indemnity in case of injury or death or any other contract 
entered into, either before or after the injury, between the 
person injured and any of the employers named in subsection 
(3) is a bar or defense to any cause of action brought under 
the provisions of this section, except as otherwise provided 
in the Workers' Compensation Act. 

39-2-704. Liability of mining company for negligence 
of fellow servants. (1) Every company, corporation, or 
individual operating any mine, smelter, or mill for the 
refining of ores is liable for damages sustained by any 
employee thereof within this state, subject to the 
provisions of 27-1-702, when such damage is caused by the 
negligence of any superintendent, foreman, shift boss, 
hoisting or other engineer, or craneman. 

(2) No contract of insurance, relief, benefit, or 
indemnity in case of injury or death or any other contract 
entered into before the injury between the person injured 
and any of the employers named in this section is a bar or 
defense to any cause of action brought under the provisions 
of this section, except as otherwise provided in the 
Workers' Compensation Act. 

(3) In case of the death of any such employee in 
consequence of any injury or damages so sustained, the right 
of action survives and may be prosecuted and maintained by 
his heirs or personal representatives. 



177 



39-2-705. Contract discharging employer liability for 
negligence void. Any contract or agreement entered into by 
any person, company, or corporation with its servants or 
employees whereby such person, company, or corporation shall 
be released or discharged from liability or responsibility 
on account of personal injuries received by such servants or 
employees while in the service of such person, company, or 
corporation, by reason of the negligence of such person, 
company, or corporation, or the agents or employees thereof, 
shall be absolutely null and void. 

39-2-801. Employee to be furnished on demand with 
reason for discharge. It is the duty of any person after 
having discharged any employee from his service, upon demand 
by such discharged employee, to furnish him in writing a 
full, succinct, and complete statement of the reason of his 
discharge and if such person refuses so to do within a 
reasonable time after such demand, it is unlawful thereafter 
for such person to furnish any statement of the reason of 
such discharge to any person or in any way to blacklist or 
to prevent such discharged person from procuring employment 
elsewhere, subject to the penalties and damages prescribed 
in this part. 

39-2-802. Protection of discharged employees. If any 
person, after having discharged an employee from his 
service, prevents or attempts to prevent by word or writing 
of any kind such discharged employee from obtaining 
employment with any other person, such person is punishable 
as provided in 39-2-804 and is liable in punitive damages to 
such discharged person, to be recovered by civil action. No 
person is prohibited from informing by word or writing any 
person to whom such discharged person or employee has 
applied for employment a truthful statement of the reason 
for such discharge. 

39-2-803. Blacklisting prohibited. If any company or 
corporation in this state authorizes or allows any of its 
agents to blacklist or any person does blacklist any 
discharged employee or attempts by word or writing or any 
other means whatever to prevent any discharged employee or 
any employee who may have voluntarily left the company's 
service from obtaining employment with another person, 
except as provided for in 39-2-802, such company or 
corporation or person is liable in punitive damages to such 
employee so prevented from obtaining employment, to be 
recovered by him in a civil action, and is also punishable 
as provided in 39-2-804. 

39-2-804. Violation of part a misdemeanor. Every 

person who violates any of the provisions of this part 

relating to the protection of discharged employees and the 

prevention of blacklisting is guilty of a misdemeanor. 



178 



> 



WAGES AND WAGE PROTECTION 
Part 1 -- General Provisions 

I 

39-3-101. Employer to furnish itemized statement of 

deductions. 
39-3-102. Compensation of employee dismissed for cause. 
39-3-103 Compensation of employee leaving for cause. 
39-3-104. Equal pay for women for equivalent service. 

Part 2 -- Payment of Wages 



as 



39-3-201. Definitions. 

39-3-202. Rulemaking power of commissioner. 

39-3-203. Employer to notify employee on written demand 

to rate of wages and date of paydays. 
39-3-204. Payment of wages generally. 
39-3-205. Payment of wages when employee separated from 

employment prior to payday. 
39-3-206. Penalty for failure to pay wages at times 

specified in law. 
39-3-207. Period within which employee may recover 

penalties. 
39-3-208 Contracts in violation of part void. 
39-3-209 Commissioner of labor to investigate violations 

and institute actions for unpaid wages. 
39-3-210. Investigative powers of commissioner. 
39-3-211 Commissioner to take wage assignments. j 

39-3-212*. Court enforcement of commissioner s 

determination. 
39-3-213. Disposition of wages. 
39-3-214. Court costs and attorneys fees. 
39-3-215. Authority of county attorney. 

Part 4 -- Minimum Wage and Overtime Compensation 

39-3-401. Declaration of policy. 

39-3-402. Definitions. 

39-3-403. Regulations. 

39-3-404. Minimum wage. 

39-3-405. Overtime compensation. 

39-3-406. Exclusions. 

39-3-407. Enforcement. 

39-3-408. Provisions cumulative. 

Part 6 -- Restaurant, Bar, and Tavern 
Wage Protection Act 

39-3-601. Short title. 

39-3-602. Purpose. 

39-3-603. Definitions. 

39-3-604. Bond to be filed -- bond requirements. 

39-3-605. Waiver of bond -- new or additional bond. 



179 



39-3-606. Power of commissioner to discharge existing 

sureties and require others. 
39-3-607. Enjoining business until bond filed. 
39-3-608. Unlawful to operate business without bond. 



Part 7 -- Contractors' Bonds for Wages and Benefits 

39-3-701. Definitions. 

39-3-702. Rules. 

39-3-703. Contractor to furnish bond for wages and fringe 

benefits -- bond requirements. 
39-3-704. Exception. 
39-3-705. Suit on bond. 
39-3-706. Liability of person contracting with contractor 

for failure to require bond. 



39-3-101. Employer to furnish itemized statement of 
deductions . (1) All employers in this state when making 
payment to employees for salaries or wages shall, upon 
making such payment, give to the employee an itemized 
statement setting forth moneys deducted because of state and 
federal income taxes, social security, or any other 
deductions together with the amount of each deduction. 

(2) Where no deduction is made in such payment of 
wages or salaries, the employer shall give to the employee a 
statement that the payment does not include any such 
deductions . 

39-3-102. Compensation of employee dismissed for 
cause . An employee dismissed by his employer for good cause 
is not entitled to any compensation for services rendered 
since the last day upon which a payment became due to him 
under the contract. 

39-3-103. Compensation of employee leaving for cause. 
An employee who quits the service of his employer for good 
cause is entitled to such proportion of the compensation 
which would become due in case of full performance as the 
services which he has already rendered bear to the services 
which he was to render as full performance. 

39-3-104. Equal pay for women for equivalent service. 
(1) It is unlawful for the state or any county, municipal 
entity, school district, public or private corporation, 
person, or firm to employ women in any occupation within the 
state for compensation less than that paid to men for 
equivalent service or for the same amount or class of work 
or labor in the same industry, school, establishment, 
office, or place of employment of any kind or description. 

(2) If the state or any county, municipal entity, 
school district, public or private corporation, person, or 
firm violates any of the provisions of subsection (1), it is 

- 180 - 



guilty of a misdemeanor and upon conviction thereof shall be 
fined not less than $25 or more than $500 for each offense. 

39-3-201. Definitions. The following are the 
definitions used for the purpose of this part: 

(1) "Commissioner of labor" refers to the director, 
commissioner, or chief of the labor department as such 
department is defined by law or any person or persons 
designated by him for the purpose of this part. 

(2) "Employ" means permit or suffer to work. 

(3) "Employee" includes any person who works for 
another for hire. 

(4) "Employer" includes any individual, partnership, 
association, corporation, business trust, legal 
representative, or any organized group of persons acting 
directly or indirectly in the interest of an employer in 
relation to an employee but shall not include the United 
States . 

(5) "Wages" includes any money due an employee from 
the employer or employers, whether to be paid by the hour, 
day, week, semimonthly, monthly, or yearly and shall include 
bonus, piecework, tips, and gratuities of any kind. 

39-3-202. Rulemaking power of commissioner. The 
commissioner is authorized to issue, amend, and enforce 
rules for the purpose of carrying out the provisions of this 
part. 

39-3-203. Employer to notify employee on written 
demand as to rate of wages and date of paydays. (1) Each 
employer or an authorized representative of the employer 
shall, on written demand, prior to the commencing of work, 
notify each employee as to the rate of wages to be paid, 
whether by the hour, day, week, month, or year, and date of 
paydays. Such notification must be in writing to each 
employee or by posting of notice in a conspicuous place. 

(2) The provisions of this section do not apply to an 
employer who has entered into a signed collective bargaining 
agreement, when such agreement contains conditions of 
employment, wages to be received, and hours to be worked, or 
to employers engaged in agriculture or stockraising; 
provided, however, such employers shall comply with the 
provisions of 39-3-205. 

39-3-204. Payment of wages generally. (1) Every 
employer of labor in the state of Montana shall pay to each 
employee the wages earned by such employee in lawful money 
of the United States or checks on banks convertible into 
cash on demand at the full face value thereof, and no person 
for whom labor has been performed may withhold from any 
employee any wages earned or unpaid for a longer period than 
10 business days after the same are due and payable. 
However, reasonable deductions may be made for board, room, 
and other incidentals supplied by the employer, whenever 
such deductions are a part of the conditions of employment, 
or other deductions provided for by law. 

(2) If at such time of payment of wages any employee 



- 181 



is absent from the regular place of labor, he is entitled to 
such payment at any time thereafter. 

(3) Provisions of this section do not apply to any 
professional, supervisory, or technical employee who by 
custom receives his wages earned at least once monthly. 

39-3-205. Payment of wages when employee separated 
from employment prior to payday. (1) Except as provided in 
subsection (2), whenever any employee is separated from the 
employ of any employer, all the unpaid wages of such 
employee shall become due and payable within 3 days, except 
for employees of the state of Montana and its political 
subdivisions who would be paid on the next regular payday 
for the pay period during which the employee was separated 
from employment or 15 days from the date of separation from 
employment, whichever occurs first, either through the 
regular pay channels or by mail if requested by the 
employee. However, where an employer's payroll checks 
originate at an office outside the state, the time provided 
herein for payment of wages shall be extended for 3 
additional days. 

(2) When an employee is separated for cause from 
employment by the employer, all the unpaid wages of the 
employee shall become due and payable immediately upon such 
separation. 

39-3-206. Penalty for failure to pay wages at times 
specified in law. Any employer, as such employer is defined 
in this part, who fails to pay any of his employees as 
provided in this part or violates any other provision of 
this part shall be guilty of a misdemeanor. A penalty shall 
also be assessed against and paid by such employer and 
become due such employee as follows: a sum equivalent to the 
fixed amount of 5% of the wages due and unpaid shall be 
assessed for each day, except Sundays and legal holidays, 
upon which such failure continues after the day upon which 
such wages were due, except that such failure shall not be 
deemed to continue more than 20 days after the date such 
wages were due. 

39-3-207. Period within which employee may recover 
penalties . Any employee may recover all such penalties as 
are provided for the violation of 39-3-206 which have 
accrued to him at any time within 18 months succeeding such 
default or delay in the payment of such wages. 

39-3-208. Contracts in violation of part void. Any 
contract or agreement made between any person, partnership, 
or corporation and any party in his or its employ the 
provisions of which violate, evade, or circumvent this part 
is unlawful and void, but such employee may sue to recover 
his wages earned, together with the 5% penalty specified in 
39-3-206 or separately to recover the penalty if the wages 
have been paid. 

39-3-209. Commissioner of labor to investigate 
violations and institute actions for unpaid wages. It shall 

- 182 - 



be the duty of the commissioner of labor to inquire 
diligently for any violations of this part and to institute 

•actions for the collection of unpaid wages and for the 
penalties provided for herein in such cases as he may deem 
proper and to enforce generally the provisions of this part. 

39-3-210. Investigative powers of commissioner. ( 1 ) 
The commissioner or his authorized representatives are 
empowered to enter and inspect such places, question such 
employees, and investigate such facts, conditions, or 
matters which they may consider appropriate to determine 
whether any person has violated any provision of this part 
or any rule issued hereunder or which may aid in the 
enforcement of the provisions of this part. 

(2) The commissioner or his authorized representatives 
may administer oaths and examine witnesses under oath; issue 
subpoenas; compel the attendance of witnesses and the 
production of papers, books, accounts, records, payrolls, 
documents, and testimony; and take depositions and 
affidavits in any proceeding before the commissioner. 

39-3-211. Commissioner to take wage assignments. 
Whenever the commissioner determines that one or more 
employees have claims for unpaid wages, he shall, upon the 
written request of the employee, take an assignment of the 
claim in trust for such employee and may maintain any 
proceeding appropriate to enforce the claim, including 
liquidated damages pursuant to this part. With the written 
A consent of the assignor, the commissioner may settle or 
adjust any claim assigned pursuant to this section. 

39-3-212. Court enforcement of commissioner' s 

determination . A determination by the commissioner of labor 
and industry made after a hearing as provided for in parts 2 
and 4 of this chapter may be enforced by application by the 
commissioner to a district court for an order or judgment 
enforcing the determination if the time provided to initiate 
judicial review by the employer has passed. The commissioner 
shall apply to the district court where the employer has its 
principal place of business or in the first judicial 
district of the state. A proceeding under this section is 
not a review of the validity of the commissioner's 
determination. 

39-3-213. Disposition of wages. (1) The commissioner 
of labor and industry shall deposit wages collected by him 
under parts 2 and 4 of this chapter into the agency fund and 
shall attempt to make payment of wages to the entitled 
person. Wages deposited into the agency fund are not 
interest bearing. The payment of wages collected may be made 
by means of state warrants. 

(2) Warrants issued pursuant to subsection (1) which 
remain unclaimed for more than 1 year from the date of 
^ issuance shall be returned to the state auditor for 
cancellation in accordance with 17-8-303. 

39-3-214. Court costs and attorneys' fees. ( 1 ) 

- 183 - 



Whenever it is necessary for the employee to enter or 
maintain a suit at law for the recovery or collection of 
wages due as provided for by this part, a resulting judgment 
must include a reasonable attorney's fee in favor of the 
successful party, to be taxed as part of the costs in the 
case . 

(2) Any judgment for the plaintiff in a proceeding 
pursuant to this part must include all costs reasonably 
incurred in connection with the proceeding, including 
attorneys' fees. 

(3) If the proceeding is maintained by the 
commissioner, no court costs or fees are required of him nor 
is he required to furnish any bond or other security that 
might otherwise be required in connection with any phase of 
the proceeding. 

39-3-215. Authority of county attorney. Nothing herein 
contained shall be construed to limit the authority of the 
county attorney of any county of the state to prosecute 
actions, both civil and criminal, for such violations of 
this part as may come to his knowledge or to enforce the 
provisions hereof independently and without specific 
direction of the commissioner of labor. 

39-3-401. Declaration of policy. It is declared to be 
the policy of this part to: 

(1) establish minimum wage and overtime compensation 
standards for workers at levels consistent with their 
health, efficiency, and general well-being; 

(2) safeguard existing minimum wage and overtime 
compensation standards which are adequate to maintain the 
health, efficiency, and general well-being of workers 
against the unfair competition of wage and hour standards 
which do not provide such adequate standards of living; and 

(3) sustain purchasing power and increase employment 
opportunities . 

39-3-402. Definitions. As used in this part the 
following definitions apply: 

(1) "Commissioner" means the commissioner of labor and 
industry. 

(2) "Employ" means to suffer or permit to work. 

(3) "Employee" includes any individual employed by an 
employer. 

(4) "Farm or ranch" shall mean any endeavor primarily 
engaged in cultivating the soil or in connection with 
raising or harvesting any agricultural or horticultural 
commodity, including the raising, shearing, feeding, caring 
for, training, and management of livestock, bees, and 
poultry and fur-bearing animals and wildlife. 

(5) "Farm worker" means any person employed to do any 
service performed on a farm or ranch. 

(6) "Occupation" means any occupation, service, trade, 
business, industry, or branch or group of industries or 
employment or class of employment in which employees are 
gainfully employed. 

(7) "Wage" means compensation due to an employee by 

- 184 - 



reason of his employment, payable in legal tender of the 
United States or check on banks convertible into cash on 
demand at full face value, subject to such allowance as may 
be permitted by regulations of the commissioner under 
39-3-403. The term "wage" includes the reasonable cost to 
the employer of furnishing such employee with board, 
lodging, or other facilities, if such board, lodging, or 
other facilities are customarily furnished by such employer 
to his employees; provided, however, that in no case shall 
such inclusion exceed an amount equal to 40% of the total 
wage paid by such employer to such employee. 

39-3-403. Regulations. The commissioner shall make and 
revise administrative regulations to carry out the purposes 
of this part. Such regulations shall take effect upon 
publication by the commissioner. Any person who is aggrieved 
by an administrative regulation may obtain a hearing before 
the commissioner upon filing written protest with the 
commissioner, who shall thereupon set such matter for 
hearing in the county of residence of such protestant within 
30 days after receipt of such protest. After such hearing, 
the commissioner shall promulgate such further 
administrative regulations as the evidence produced at said 
hearing shall justify. 

39-3-404. Minimum wage. (1) Except as may otherwise be 
provided pursuant to this part, every employer shall pay to 
each of his employees wages at a rate not less than provided 
in subsections (l)(a) and (l)(b), save and except for farm 
workers as herein defined: 

(a) $2.50 an hour for the first year from July 1, 
1981; 

(b) $2.75 an hour for the second year from July 1, 
1981, and thereafter. 

(2) In the case of a farm worker employed for a part 
of a calendar year which includes periods requiring working 
hours in excess of 8 hours per day and other seasonal 
periods requiring working hours substantially less than 8 
hours per day, the employer may pay the worker at a fixed 
rate of compensation during the term of employment. The 
employer may elect to: 

(a) keep a record of the total number of hours worked 
by the worker during the part of the year during which the 
worker was employed by him (the total wages paid by such 
employer to such employee for that part of the year during 
which said employee was employed by him shall not be less 
than the applicable minimum wage rate multiplied by the 
total number of hours so worked); or 

(b) in lieu of the minimum wage set forth herein, pay 
the farm worker a wage as herein defined on a monthly basis. 
This monthly compensation shall constitute a minimum wage 
and shall not be less than the following rates: 

(i) $575 a month for the first year from July 1, 1981; 
(ii) $635 a month for the second year from July 1, 
1981, and thereafter. 

39-3-405. Overtime compensation. (1) No employer shall 

- 185 - 



employ any of his employees for a workweek longer than 40 
hours unless such employee receives compensation for his 
employment in excess of 40 hours in a workweek at a rate of 
not less than 1 1/2 times the hourly wage rate at which he 
is employed. 

(2) No overtime provision shall apply for farm 
workers . 

(3) Employers of students at an amusement or 
recreational area that operates on a seasonal basis who 
furnish said students with board, lodging, or other 
facilities shall not employ said students for a workweek 
longer than 48 hours, unless such students receive 
compensation for their employment in excess of 48 hours in 
a workweek at a rate of not less than 1 1/2 times the hourly 
wage rate at which they are employed. 

39-3-406. Exclusions. (1) The provisions of 39-3-404 
and 39-3-405 shall not apply with respect to: 

(a) students participating in a distributive education 
program established under the auspices of an accredited 
educational agency; 

(b) persons employed in private homes whose duties 
consist of menial chores such as babysitting, mowing lawns, 
cleaning sidewalks; 

(c) persons employed directly by the head of a 
household to care for children dependent upon the head of 
the household; 

(d) immediate members of the family of an employer or 
persons dependent upon an employer for half or more of their 
support in the customary sense of being a dependent; 

(e) any persons not regular employees thereof who 
voluntarily offer their services to a nonprofit organization 
on a fully or partially reimbursed basis; 

(f) handicapped workers engaged in work which is 
incidental to training or evaluation programs or whose 
earning capacity is so severely impaired that they are 
unable to engage in competitive employment; 

(g) apprentices or learners, who may be exempted by 
the commissioner for a period not to exceed 30 days of their 
employment; 

(h) learners under the age of 18 who are employed as 
farm workers, provided that such exclusion shall not exceed 
a period of 180 days from their initial date of employment 
and further provided that during this exclusion period wages 
paid such learners may not be less than 50% of the minimum 
wage rate established in this part; 

(i) retired or semiretired persons performing 
part-time incidental work as a condition of their residence 
on a farm or ranch; 

(j) any individual employed in a bona fide executive, 
administrative, or professional capacity as these terms are 
defined and delimited by regulations of the commissioner; 

(k) any individual employed by the United States of 
America. 

(2) The provisions of 39-3-40$ do not apply to: 

(a) an employee with respect to whom the United States 
Secretary of Transportation has power to establish 



- 186 



qualifications and maximum hours of service pursuant to the 
provisions of 49 U.S.C. 304; 

(b) an employee of an employer subject to the 
provisions of part I of the Interstate Commerce Act; 

(c) an individual employed as an outside buyer of 
poultry, eggs, cream, or milk, in their raw or natural 
state; 

(d) a salesman, partsman, or mechanic paid on a 
commission or contract basis and primarily engaged in 
selling or servicing automobiles, trucks, mobile homes, 
recreational vehicles, or farm implements if he is employed 
by a nonmanuf acturing establishment primarily engaged in the 
business of selling such vehicles or implements to ultimate 
purchasers; 

(e) a salesman primarily engaged in selling trailers, 
boats, or aircraft if he is employed by a nonmanuf acturing 
establishment primarily engaged in the business of selling 
trailers, boats, or aircraft to ultimate purchasers; 

(f) an employee employed as a driver or driver's 
helper making local deliveries who is compensated for such 
employment on the basis of trip rates, or other delivery 
payment plan, if the commissioner finds that such plan has 
the general purpose and effect of reducing hours worked by 
such employees to or below the maximum workweek applicable 
to them under 39-3-405; 

(g) an employee employed in agriculture or in 
connection with the operation or maintenance of ditches, 
canals, reservoirs, or waterways not owned or operated for 
profit and not operated on a sharecrop basis and which are 
used exclusively for supply and storing of water for 
agricultural purposes; 

(h) an employee with respect to his employment in 
agriculture by a farmer, notwithstanding other employment of 
such employee in connection with livestock auction 
operations in which such farmer is engaged as an adjunct to 
the raising of livestock, either on his own account or in 
conjunction with other farmers, if such employee is: 

(i) primarily employed during his workweek in 
agriculture by such farmer; and 

(ii) paid for his employment in connection with such 
livestock auction operations at a wage rate not less than 
that prescribed by 39-3-404; 

(i) an employee of an establishment commonly 
recognized as a country elevator, including an establishment 
which sells products and services used in the operation of a 
farm, if no more than five employees are employed by the 
establishment; 

(j) a driver employed by an employer engaged in the 
business of operating taxicabs; 

(k) an employee who is employed with his spouse by a 
nonprofit educational institution to serve as the parents of 
children who are orphans or one of whose natural parents is 
deceased or who are enrolled in such institution and reside 
in residential facilities of the institution so long as the 
children are in residence at the institution and so long as 
such employee and his spouse reside in such facilities and 
receive, without cost, board and lodging from the 



187 



institution and are together compensated, on a cash basis, 
at an annual rate of not less than $10,000; 

(1) an employee employed in planting or tending trees; 
cruising, surveying, or felling timber; or transporting logs 
or other forestry products to a mill, processing plant, 
railroad, or other transportation terminal if the number of 
employees employed by his employer in such forestry or 
lumbering operations does not exceed eight; 

(m) an employee of a sheriff's department who is 
working under an established work period in lieu of a 
workweek pursuant to 7-4-2509(1); 

(n) an employee of a municipal or county government 
who is working under a work period not exceeding 40 hours in 
a 7-day period established through a collective bargaining 
agreement when a collective bargaining unit represents the 
employee or by mutual agreement of the employer and employee 
where no bargaining unit is recognized. Employment in 
excess of 40 hours in a 7-day, 40-hour work period must be 
compensated at a rate of not less than 1 1/2 times the 
hourly wage rate for the employee. 

(o) an employee of a hospital or other establishment 
primarily engaged in the care of the sick, disabled, aged, 
or mentally ill or defective who is working under a work 
period not exceeding 80 hours in a 14-day period established 
through either a collective bargaining agreement when a 
collective bargaining unit represents the employee or by 
mutual agreement of the employer and employee where no 
bargaining unit is recognized. Employment in excess of 8 
hours per day or 80 hours in a 14-day period must be 
compensated for at a rate of not less than 1 1/2 times the 
hourly wage rate for the employee. 

(p) a firefighter who is working under a work period 
established in a collective bargaining agreement entered 
into between a public employer and a firefighters' 
organization or its exclusive representative; 

(q) an officer or other employee of a police 
department in a city of the first or second class who is 
working under a work period established by the chief of 
police under 7-32-4118. 

39-3-407. Enforcement. Enforcement of this part shall 
be treated as a wage claim action and shall be pursued in 
accordance with part 2 of this chapter, as amended. This 
part may also be enforced in accordance with part 5 of this 
chapter for the benefit of certain employees in the mineral 
and oil industry. The commissioner may enforce this part 
without the necessity of a wage assignment. 

39-3-408. Provisions cumulative. The provisions of 

this part shall be in addition to other provisions now 

provided by law for the payment and collection of wages and 

salaries but shall not apply to employees covered by the 
Fair Labor Standards Act. 

39-3-601. Short title. This part shall be known as the 
"Restaurant, Bar, and Tavern Wage Protection Act" 



188 



39-3-602. Purpose. The purpose of this part is to 
protect the state of Montana and employees of persons 
operating businesses as restaurants, bars, and taverns; to 
assure the payment of wages to such employees in the event 
the person ceases operation of his business and is unable to 
pay the wages due and owing to his employees; and to assure 
the payment of payroll taxes to the department. 

39-3-603. Definitions. For the purposes of this part, 
the words and phrases used herein have the following 
meaning: 

(1) "Bar" or "tavern" means a house where liquor or 
beer is sold to be drunk on the premises. 

(2) "Beer" means any beverage so defined in the 
Montana Alcoholic Beverages Code. 

(3) "Business" means a commercial enterprise of any 
kind involving the buying and selling of goods. 

(4) "Commissioner" means the commissioner of labor and 
industry provided for in 2-15-1701. 

(5) "Department" means the department of labor and 
industry provided for in 2-15-1701. 

(6) "Employee" means a person who works for wages or 
salary in the service of an employer. 

(7) "Liquor" means any beverage so defined in the 
Montana Alcoholic Beverages Code. 

(8) "Person" includes any establishment, firm, 
partnership, corporation, person, or association of persons. 

(9) "Restaurant" means a public eating house where 
food is prepared and served for human consumption on the 
premises. 

39-3-604. Bond to be filed -- bond requirements. ( 1 ) 
Every person operating a business as a restaurant, bar, or 
tavern is hereby required to file a bond equal to at least 
double the amount of the projected semimonthly payroll with 
the commissioner. Said bond shall at all times be kept in 
full force and effect, and any cancellation or revocation 
thereof or withdrawal of the sureties therefrom is grounds 
for enjoining the operation of business, as provided for in 
39-3-607, until such time as a new bond of like tenure and 
effect shall have been filed and approved as herein 
provided. 

(2) The bond required by subsection (1) of this 
section shall be filed with the commissioner. The state of 
Montana shall be named as the obligee therein, with good and 
sufficient sureties to be approved by the attorney general. 

(3) Such bond shall be conditioned to assure that the 
employees who perform labor or other personal services are 
guaranteed their wages in the event the person ceases 
operation of the business for any reason and is unable to 
pay the wages due and owing the employees and to assure 
payment due the department as a result of payroll taxes. 

(4) Except as provided in 39-3-605(2), this section 
does not apply to any person who has operated the same 
restaurant, bar, or tavern continuously since October 1, 
1980. 



- 189 



39-3-605. Waiver of bond -- new or additional bond. 
(1) After 3 years of compliance with this part, the 
commissioner shall waive the provisions of 39-3-604 for any 
person showing compliance with the applicable provisions of 
the Fair Labor Standards Act and all the applicable laws 
administered by the department. 

(2) Notwithstanding 39-3-604(4) and subsection (1) of 
this section, the commissioner may require a person 
operating a restaurant, bar, or tavern, including a person 
who has been in business since October 1, 1980, or for over 
3 years, to file a new bond or a bond of a greater amount 
than double the semimonthly payroll whenever the person 
operating a restaurant, bar, or tavern defaults on the 
payment of wages, payroll taxes, or workers' compensation 
premiums . 

39-3-606. Power of commissioner to discharge existing 
sureties and require others. The commissioner of labor and 
industry may, after due notice given, discharge the existing 
sureties from further liability and require that other 
sureties be provided. 

39-3-607. Enjoining business until bond filed. If any 
person operates a restaurant, bar, or tavern business 
without having first filed a bond as required by 39-3-604 or 
by 39-3-605, the attorney general, the commissioner, or any 
citizen, group of citizens, or any association in the county 
where the violator operates his business may institute an 
action to enjoin such person from operating the business 
until compliance with this part has been met. 

39-3-608. Unlawful to operate business without bond. 
From and after October 1, 1983, it shall be unlawful for any 
person to operate a restaurant, bar, or tavern business 
without first having filed with the commissioner a bond in 
accordance with the requirements of 39-3-604 or 39-3-605. 

39-3-701. Definitions. As used in this part, unless 
the context clearly requires otherwise, the following 
definitions apply: 

(1) "Commissioner" means the commissioner of labor and 
industry. 

(2) "Contractor" means any person, firm, association, 
or corporation engaged in the construction business. 

(3) "Resident contractor" means any person who is a 
bona fide resident of this state, any partnership or 
association, the majority of whose members are bona fide 
residents of this state, or any corporation organized and 
existing under the laws of the state of Montana. 

39-3-702. Rules. The commissioner shall promulgate any 
rules necessary to carry out the provisions of this part. 

39-3-703. Contractor to furnish bond for wages and 
fringe benefits -- bond requirements. ( 1 ) Any contractor who 
contracts with another to do any work or perform any 
services for the other, except personal services of the 



190 



contractor not involving work of hired employees, shall 
furnish a surety bond or other form of security to the other 
which shall be: 

(a) approved by the commissioner; 

(b) in an amount equal to the contractor's average 
monthly payroll as estimated by the commissioner; 

(c) in the name of the state of Montana; 

(d) for the purpose of insuring the wages and fringe 
benefits of all workers employed by the contractor for the 
contracted work; 

(e) filed with the commissioner within 1 week of the 
making of the contract or the commencement of work 
thereunder, whichever comes first. 

(2) Only one bond shall be required on any contractor 
for each year, and when the bond is filed with and approved 
by the commissioner, the commissioner shall certify to any 
person contracting with a contractor that the bond is in 
full force and effect. 

39-3-704. Exception. The provisions of this part do 
not apply to any resident contractor who presents to the 
commissioner a financial statement certified by a licensed 
certified public accountant attesting to a net worth of the 
contractor in excess of $50,000. 

39-3-705. Suit on bond. Any employee employed by a 
contractor may bring an action on the surety bond in his own 
name for unpaid wages and fringe benefits. 

39-3-706. Liability of person contracting with 
contractor for failure to require bond. Any person 
contracting with a contractor who fails to require the 
contractor to acquire the surety bond provided for in 
39-3-703(1) is liable to the employees of that contractor 
for their wages and fringe benefits on that particular job. 



191 - 



HOURS OF LABOR IN CERTAIN EMPLOYMENTS 

Part 1 -- Hours of Labor—Penalties 
and Liability for Violations Thereof 

Section 

39-4-106. Telephone operators. 

39-4-107. State and municipal governments, school 

districts, mines, mills, and smelters. 
39-4-111. Restaurants. 



39-4-106. Telephone operators. (1) On all lines of 
public telephones operated in whole or in part within this 
state, it shall hereafter be unlawful for any owner, lessee, 
company, or corporation to hire or employ any operator or 
operators, other person or persons to run or operate a 
telephone board or boards for more than 9 hours in 24 hours 
in cities or towns having a population of 3,000 inhabitants 
or over. 

(2) The provisions of this section shall not apply to 
any person or persons, operator or operators operating any 
telephone board or boards more than 9 hours in each 24 for 
the purpose of relieving another employee in case of 
sickness or other unforeseen cause or causes. 

(3) Any owner, lessee, company, or corporation who 
shall violate any of the provisions of this section shall 
upon conviction be punished by a fine of not less than $100 
or more than $500. Each and every day that such owner, 
lessee, company, or corporation may continue to violate any 
of the provisions of this section shall be considered a 
separate and distinct offense and shall be punished as such. 

39-4-107. State and municipal governments, school 
districts, mines, mills, and smelters. (1) A period of 8 
hours constitutes a day's work in all works and undertakings 
carried on or aided by any municipal or county government, 
the state government, or a first-class school district, and 
on all contracts let by them, and for all janitors (except 
in courthouses of sixth- and seventh-class counties), 
engineers, firefighters, caretakers, custodians, and 
laborers employed in or about any buildings, works, or 
grounds used or occupied for any purpose by such municipal, 
county, or state government or first-class school district. 
A period of 8 hours constitutes a day's work in mills and 
smelters for the treatment of ores, in underground mines, 
and in the washing, reducing, and treatment of coal. This 
subsection does not apply in the event of an emergency when 
life or property is in imminent danger or to the situations 
specified in subsections (3) and (4). 

(2) The provisions of subsection (1) do not apply to 
firefighters who are working a work period established in a 
collective bargaining agreement entered into between a 
public employer and a firefighters' organization or its 



192 



exclusive representative. 

(3) In counties where regular road and bridge 
departments are maintained, the county commissioners may, 
with the approval of the employees or their duly constituted 
representative, establish a 40-hour workweek consisting of 4 
consecutive 10-hour days. No employee may be required to 
work in excess of 8 hours in any one workday if he prefers 
not to. 

(4) In municipal and county governments, the employer 
and employee may agree to a workday of more than 8 hours and 
to a 7-day, 40-hour work period: 

(a) through a collective bargaining agreement when a 
collective bargaining unit represents the employee; or 

(b) by the mutual agreement of the employer and 
employee when no bargaining unit is recognized. 

39-4-111. Restaurants. (1) A period of not more than 8 
hours shall constitute a day's work, and a period of not to 
exceed 48 hours shall constitute a week' s work for persons 
employed in or about restaurants, cafes, lunch counters, and 
other commercial eating establishments. The hours of work 
must be so arranged that persons employed in or about 
restaurants, cafes, lunch counters, and other commercial 
eating establishments shall not be on duty more than 8 hours 
in the aggregate of any 12 consecutive hours. Such persons 
shall have at least 12 consecutive hours off duty. 

(2) The provisions of this section shall not apply to 
any person or persons working more than 8 hours during any 
12 consecutive hours or more than 48 hours during any week 
for the purpose of relieving another employee in case of 
sickness or where the health of the public is imperiled, 
where life and property are in imminent danger, or for other 
unforeseen cause or causes. 

(3) Any person, corporation, manager, agent, or 
employer who shall violate any of the provisions of this 
section shall be guilty of a misdemeanor and upon conviction 
thereof shall be punished by a fine of not less than $25 or 
more than $50 or by imprisonment in the county jail for not 
less than 15 days or more than 60 days or by both such fine 
and imprisonment. 



- 193 - 



WOMEN IN EMPLOYMENT 
DISPLACED HOMEMAKERS 

Part 1 -- Duties of Department of Labor and Industry 

Section 

39-7-101. Legislative policy. 
39-7-102. Rules of procedure and practice. 
39-7-103. Duties of department. 

39-7-104. Department to work in close cooperation with 
commission on human rights. 



Part 2 -- Maternity Leave 

(Repealed and Renumbered. 

Sec. 2, 3, Ch. 285, L. 1983) 



39-7-101. Legislative policy. This part establishes as 
an affirmative policy of this state within the department of 
labor and industry procedures which will enable women to 
contribute to society according to their fullest possible 
potential . 

39-7-102. Rules of procedure and practice. The 
commissioner of the department of labor and industry may 
issue rules of procedure and practice consistent with the 
Montana Administrative Procedure Act in order to administer 
and carry out the purposes of this part. 

39-7-103. Duties of department. The department of 
labor and industry shall: 

(1) conduct studies about the changing employment 
needs and problems of women in Montana and make 
recommendations to the governor and the legislature; 

(2) direct public attention to critical employment 
problems confronting women as wives, mothers, homemakers, 
and workers; 

(3) serve as a clearinghouse for information and 
materials pertinent to programs and services available to 
assist and advise women on employment and related matters; 

(4) cooperate with governmental departments and 
agencies primarily involved in curbing job discrimination 
and in the expansion of employment rights and opportunities 
available to the women of this state; 

(5) conduct periodic conferences throughout the state 
to make women more aware of employment opportunities, 
programs, and services available to them; 

(6) serve as the central, permanent agency for the 
coordination and evaluation of employment programs and 
services for women of the state and as a planning agency for 
the development of those services; 

(7) encourage women's organizations and other groups 
to institute local self-help activities designed to meet 

- 194 - 



women's employment and related needs; 

(8) apply for and receive grants, appropriations, or 
gifts from any federal, state, or local agency, private 
foundation, or individual to carry out the purposes of this 
part. 

39-7-104. Department to work in close cooperation with 
commission on human rights. It is the intent of the 
legislature that the functions in the department of labor 
and industry delineated in this part pertaining to the 
status of women shall, where appropriate, be performed in 
close cooperation with the commission on human rights. 



- 195 - 



♦ 



I 



STATE EMPLOYEE CLASSIFICATION, 
COMPENSATION, AND BENEFITS 

Part 6 -- Leave Time 

2-18-601. Definitions. 

2-18-602. Repealed. 

2-18-603. Holidays -- observance when falling on employee's 

day off. 
2-18-604. Administration of rules. 
2-18-605. Sick-pay plan for state employees. 
2-18-606 through 2-18-610 reserved. 
2-18-611. Annual vacation leave. 
2-18-612. Rate earned. 
2-18-613. Repealed. 

2-18-614. Military leave considered service. 
2-18-615. Absence because of illness not chargeable against 

vacation unless employee approves. 
2-18-616. Determination of vacation dates. 
2-18-617. Accumulation of leave -- cash for unused 

transfer. 
2-18-618. Sick leave. 

2-18-619. Jury duty -- service as witness. 
2-18-620. Mandatory leave of absence for employees holding 

public office -- return requirements. 
2-18-621. Unlawful termination. 



2-18-601. Definitions. For the purpose of this part, 
except 2-18-620, the following definitions apply: 

(1) "Agency" means any legally constituted department, 
board, or commission of state, county, or city government or 
any political subdivision thereof. 

(2) "Employee" means any person employed by an agency 
except elected state, county, and city officials, 
schoolteachers, and persons contracted as independent 
contractors or hired under personal services contracts. 

(3) "Permanent employee" means an employee who is 
assigned to a position designated as permanent on the 
appropriate list of authorized positions referenced in 
2-18-206 and approved as such in the biennium budget. 

(4) "Part-time employee" means an employee who 
normally works less than 40 hours a week. 

(5) "Full-time employee" means an employee who 
normally works 40 hours a week. 

(6) "Temporary employee" means an employee assigned to 
a position designated as temporary on the appropriate agency 
list of authorized positions referenced in 2-18-206, created 
for a definite period of time not to exceed 9 months. 

(7) "Seasonal employee" means an employee assigned to 
a position designated as seasonal on the appropriate agency 
list of authorized positions referenced in 2-18-206 and for 
which the agency has a permanent need but which is 
interrupted by the seasonal nature of the assignment. 

(8) "Vacation leave" means a leave of absence with pay 
for the purpose of rest, relaxation, or personal business at 



196 



the request of the employee and with the concurrence of the 
employer. 

(9) "Sick leave" means a leave of absence with pay for 
a sickness suffered by an employee or his immediate family. 

(10) "Sick-pay plan" means a plan that: 

(a) provides for an agency to make payments in lieu of 
wages to employees on account of sickness or accident 
disability; and 

(b) meets the requirements of 42 U.S.C. 409(b) or (d) . 

(11) "Transfer" means a change of employment from one 
agency to another agency in the same jurisdiction without a 
break in service. 

(12) "Continuous employment" means working within the 
same jurisdiction without a break in service of more than 5 
working days or without a continuous absence without pay of 
more than 15 working days. 

(13) "Break in service" means a period of time in 
excess of 5 working days when the person is not employed and 
that severs continuous employment. 

2-18-602. Repealed. Sec. 12, Ch. 568, L. 1979. 

2-18-603. Holidays -- observance when falling on 
employee's day off. (1) Any full-time employee who is 
scheduled for a day off on a day which is observed as a 
legal holiday, except Sundays, shall be entitled to receive 
a day off with pay either on the day preceding the holiday 
or on another day following the holiday in the same pay 
period or as scheduled by the employee and his supervisor, 
whichever allows a day off in addition to the employee's 
regularly scheduled days off, provided the employee is in a 
pay status on his last regularly scheduled working day 
immediately before the holiday or on his first regularly 
scheduled working day immediately after the holiday. 
Part-time employees receive pay for the holiday on a 
prorated basis according to rules adopted by the department 
of administration or appropriate administrative officer 
under 2-18-604. 

(2) For purposes of this section, the term "employee" 
does not include nonteaching school district employees. 

2-18-604. Administration of rules. The department of 
administration or the administrative officer of any county, 
city, or political subdivision is responsible for the proper 
administration of the employee annual, sick, or military 
leave provisions and the jury duty provisions found in this 
part and shall promulgate rules necessary to achieve the 
uniform administration of these provisions and to prevent 
the abuse thereof. When promulgated, the rules are effective 
as to all employees of the state or any county, city, or 
political subdivision thereof. 

2-18-605. Sick-pay plan for state employees . The 
department of administration shall. develop and administer a 
sick-pay plan for state employees. The plan shall be based 
on the use of sick leave credits provided for in 2-18-618. 
Payments from the plan may be made only from funds 



197 



appropriated for that purpose. Until the plan is developed 
and implemented or if no funds are appropriated or if 
appropriated funds are insufficient to fully fund the plan, 
state employees may utilize sick leave provided for in 
2-18-618, including accrued sick leave. 

2-18-606 through 2-18-610 reserved. 

2-18-611. Annual vacation leave. (1) Each permanent 
full-time employee shall earn annual vacation leave credits 
from the first day of employment. For calculating vacation 
leave credits, 2,080 hours (52 weeks x 40 hours) shall equal 
1 year. Vacation leave credits earned shall be credited at 
the end of each pay period. However, employees are not 
entitled to any vacation leave with pay until they have been 
continuously employed for a period of 6 calendar months. 

(2) Seasonal employees shall earn vacation credits. 
However, such persons must be employed 6 qualifying months 
before they may use the vacation credits. In order to 
qualify, such employees must immediately report back for 
work when operations resume in order to avoid a break in 
service . 

(3) Permanent part-time employees are entitled to 
prorated annual vacation benefits if they have worked the 
qualifying period. 

(4) An employee may not accrue annual vacation leave 
credits while in a leave-without-pay status. 

(5) Temporary employees do not earn vacation leave 
credits, except that a temporary employee who is 
subsequently hired into a permanent position within the same 
jurisdiction without a break in service and temporary 
employees who are employed continuously longer than 6 months 
may count as earned leave credits for the immediate term of 
temporary employment. 

2-18-612. Rate earned. Vacation leave credits are 
earned at a yearly rate calculated in accordance with the 
following schedule, which applies to the total years of an 
employee's employment with any agency whether the employment 
is continuous or not: 

Years of employment Working days credit 

1 day through 10 years 15 

10 years through 15 years 18 

15 years through 20 years 21 

20 years on 24 

2-18-613. Repealed. Sec. 12, Ch. 568, L. 1979. 

2-18-614. Military leave considered service. A period 
of absence from employment with the state, county, or city 
occurring either during a war involving the United States or 
in any other national emergency and for 90 days thereafter 
for one of the following reasons is considered as service 
for the purpose of determining the number of years of 
employment used in calculating vacation leave credits under 



198 - 



this section: 

(1) having been ordered on active duty with the armed 
forces of the United States; 

(2) voluntary service on active duty in the armed 
forces or on ships operated by or for the United States 
government; or 

(3) direct assignment to the United States department 
of defense for duties related to national defense efforts if 
a leave of absence has been granted by the employer. 

2-18-615. Absence because of illness not chargeable 
against vacation unless employee approves. Absence from 
employment by reason of illness shall not be chargeable 
against unused vacation leave credits unless approved by the 
employee . 

2-18-616. Determination of vacation dates. The dates 
when employees' annual vacation leaves shall be granted 
shall be determined by agreement between each employee and 
his employing agency with regard to the best interest of the 
state, any county or city thereof as well as the best 
interests of each employee. 

2-18-617. Accumulation of leave -- cash for unused -- 
transfer. (1) Annual vacation leave may be accumulated to a 
total not to exceed two times the maximum number of days 
earned annually as of the end of the first pay period of the 
next calendar year. Excess vacation time is not forfeited 
if taken within 90 calendar days from the last day of the 
calendar year in which the excess was accrued. 

(2) An employee who terminates his employment for 
reason not reflecting discredit on himself shall be entitled 
upon the date of such termination to cash compensation for 
unused vacation leave, assuming that the employee has worked 
the qualifying period set forth in 2-18-611. 

(3) However, if an employee transfers between agencies 
of the same jurisdiction, there shall be no cash 
compensation paid for unused vacation leave. In such a 
transfer the receiving agency assumes the liability for the 
accrued vacation credits transferred with the employee. 

2-18-618. Sick leave. (1) Each permanent full-time 
employee shall earn sick leave credits from the first day of 
employment. For calculating sick leave credits, 2,080 hours 
(52 weeks x 40 hours) shall equal 1 year. Sick leave credits 
shall be credited at the end of each pay period. Sick leave 
credits shall be earned at the rate of 12 working days for 
each year of service without restriction as to the number of 
working days that may be accumulated. Employees are not 
entitled to be paid sick leave until they have been 
continuously employed 90 days. 

(2) An employee may not accrue sick leave credits 
while in a leave-without-pay status. 

(3) Permanent part-time employees are entitled to 
prorated leave benefits if they have worked the qualifying 
period. 

(4) Full-time temporary and seasonal employees are 



199 



entitled to sick leave benefits provided they work the 
qualifying period. 
i (5) An employee who terminates employment with the 

' agency is entitled to a lump-sum payment equal to one-fourth 
of the pay attributed to the accumulated sick leave. The pay 
attributed to the accumulated sick leave shall be computed 
on the basis of the employee's salary or wage at the time 
he terminates his employment with the state, county, or 
city. Accrual of sick leave credits for calculating the 
lump-sum payment provided for in this subsection begins July 
1, 1971. The payment therefor shall be the responsibility of 
the agency wherein the sick leave accrues. However, no 
employee forfeits any sick leave rights or benefits he had 
accrued prior to July 1, 1971. However, where an employee 
transfers between agencies within the same jurisdiction, he 
shall not be entitled to a lump-sum payment. In such a 
transfer the receiving agency shall assume the liability for 
the accrued sick leave credits earned after July 1, 1971, 
and transferred with the employee. 

(6) An employee who receives a lump-sum payment 
pursuant to this section and who is again employed by any 
agency shall not be credited with any sick leave for which 
the employee has previously been compensated. 

(7) Abuse of sick leave is cause for dismissal and 
forfeiture of the lump-sum payments provided for in this 
section. 

2-18-619. Jury duty -- service as witness. (1) Each 
| employee who is under proper summons as a juror shall 
collect all fees and allowances payable as a result of the 
service and forward the fees to the appropriate accounting 
office. Juror fees shall be applied against the amount due 
the employee from his employer. However, if an employee 
elects to charge his juror time off against his annual 
leave, he shall not be required to remit his juror fees to 
his employer. In no instance is an employee required to 
remit to his employer any expense or mileage allowance paid 
him by the court. 

(2) An employee subpoenaed to serve as a witness shall 
collect all fees and allowances payable as a result of the 
service and forward the fees to the appropriate accounting 
office. Witness fees shall be applied against the amount due 
the employee from his employer. However, if an employee 
elects to charge his witness time off against his annual 
leave, he shall not be required to remit his witness fees to 
his employer. In no instance is an employee required to 
remit to his employer any expense or mileage allowances paid 
him by the court. 

(3) Employers may request the court to excuse their 
employees from jury duty if they are needed for the proper 
operation of a unit of state or local government. 

2-18-620. Mandatory leave of absence for employees 

j holding public office -- return requirements. (1) Employers 

of employees elected or appointed to a public office in the 

city, county, or state shall grant such employees leaves of 

absence, not to exceed 180 days per year, while they are 



- 200 



performing public service. 

(2) Employees granted a leave shall make arrangements 
to return to work within 10 days following the completion of 
the service for which the leave was granted unless they are 
unable to do so because of illness or disabling injury 
certified to by a licensed physician. 

(3) Any unemployment benefits paid to any person by 
application of this section shall not be charged against any 
employer under the unemployment insurance law. 

2-18-621. Unlawful termination. It shall be unlawful 
for an employer to terminate or separate an employee from 
his employment in an attempt to circumvent the provisions of 
2-18-611, 2-18-612, and 2-18-614. Should a question arise 
under this section, it shall be submitted to arbitration as 
provided in Title 27, chapter 5, unless there is a 
collective bargaining agreement applicable. 



* 



- 201 



CONSTRUCTION CONTRACTS 

Part 4 -- Special Conditions—Labor 

18-2-401. Definitions. 

18-2-402. Standard prevailing rate of wages. 

18-2-403. Preference of Montana labor in public works -- 

wages -- federal exception. 
18-2-404. Approval of contract -- bond. 
18-2-405. When fringe benefits paid as wages. 
18-2-406. Posting wage scale. 

18-2-407. Forfeiture for failure to pay prevailing wages. 
18-2-408. Penalty for violation. 
18-2-409 through 18-2-420 reserved. 
18-2-421. Notice. 
18-2-422. Bid specification and contract to contain 

prevailing wage rate. 
18-2-423. Submission of payroll records. 
18-2-424. Enforcement. 



18-2-401. Definitions. Unless the context requires 
otherwise, in this part the following definitions apply: 

(1) "Labor" is hereby defined to be all services 
performed in the construction, repair, or maintenance of all 
state, county, municipal, and school work and does not 
include engineering, superintendence, management, or office 
or clerical work. 

(2) "Commissioner" means the commissioner of labor and 
industry provided for in 2-15-1701. 

(3) "Department" means the department of labor and 
industry provided for in 2-15-1701. 

(4) A "bona fide resident of Montana" is hereby 
declared to be a person who, at the time of his employment 
and immediately prior thereto, has lived in this state in 
such a manner and for such time as is sufficient to clearly 
justify the conclusion that his past habitation in this 
state has been coupled with intention to make it his home. 
Sojourners or persons who come to Montana solely in 
pursuance of any contract or agreement to perform such labor 
shall under no circumstance be deemed to be bona fide 
residents of Montana within the meaning and for the purpose 
of this part. 

(5) (a) "Standard prevailing rate of wages, including 
fringe benefits for health and welfare and pension 
contributions and travel allowance provisions applicable to 
the county or locality in which the work is being 
performed," means those wages, including fringe benefits for 
health and welfare and pension contributions and travel 
allowance provisions, which are paid in the county or 
locality by other contractors for work of a similar 
character performed in that county or locality by each 
craft, classification, or type of worker needed to complete 
a contract under this part. 



- 202 



(b) When work of a similar character is not being 
performed in the county or locality, the standard prevailing 
rate of wages, including fringe benefits for health and 
welfare and pension contributions and travel allowance 
provisions, shall be those rates established by collective 
bargaining agreements in effect in the county or locality 
for each craft, classification, or type of worker needed to 
complete the contract. 

18-2-402. Standard prevailing rate of wages. ( 1 ) The 
Montana commissioner of labor may determine the standard 
prevailing rate of wages in the county or locality in which 
the contract is to be performed. The commissioner shall 
undertake to keep and maintain copies of collective 
bargaining agreements and other information from which rates 
and jurisdictional areas applicable to public works 
contracts under this part may be ascertained. 

(2) The provisions of this part do not apply in those 
instances where the standard prevailing rate of wages is 
determined pursuant to federal law. 

(3) In no instances where this part is applicable 
shall the standard prevailing rate of wage be determined to 
be greater than the applicable rate of wage in the area for 
the particular work in question as negotiated under existing 
and current collective bargaining agreements. 

18-2-403. Preference of Montana labor in public works 
wages -- federal exception. (1) In any contract let for 
state, county, municipal, school, or heavy highway 
construction, services, repair, or maintenance work under 
any law of this state, there shall be inserted in the bid 
specification and the contract a provision requiring the 
contractor to give preference to the employment of bona fide 
Montana residents in the performance of the work and to pay 
the standard prevailing rate of wages, including fringe 
benefits for health and welfare and pension contributions 
and travel allowance provisions, in effect and applicable to 
the county or locality in which the work is being performed. 

(2) No contract may be let to any person, firm, 
association, or corporation refusing to execute an agreement 
with the above-mentioned provisions in it, provided that in 
contracts involving the expenditure of federal-aid funds 
this part may not be enforced in such a manner as to 
conflict with or be contrary to the federal statutes 
prescribing a labor preference to honorably discharged 
veterans of the armed forces and prohibiting as unlawful any 
other preference or discrimination among citizens of the 
United States. 

(3) Failure to include the provisions required by 
18-2-422 in a public works contract relieves the contractor 
from his obligation to pay the standard prevailing wage rate 
and places such obligation on the public contracting agency. 

18-2-404. Approval of contract -- bond. (1) All public 
works contracts under this part shall be approved in writing 
by the legal adviser of the contracting state, county, 
municipal corporation, school district, assessment district, 



203 - 



4 



or special improvement district body or officer prior to 
execution by the contracting public officer or officers. 

(2) In all contracts entered into under the provisions 
of this part at least $1,000 of the contract price shall be 
withheld at all times until the termination of the contract. 

18-2-405. When fringe benefits paid as wages. Whenever 
the employer is not signatory party to a collective 
bargaining agreement, those moneys designated as negotiated 
fringe benefits shall be paid to the employee as wages. 

18-2-406. Posting wage scale . Contractors, 

subcontractors, and employers who are performing work or 
providing services under public works contracts as provided 
in this part shall post in a prominent and accessible site 
on the project or work area, not later than the first day of 
work, a legible statement of all wages to be paid to the 
employees employed on such site or work area. 

18-2-407. Forfeiture for failure to pay prevailing 
wages . (1) Any contractor, subcontractor, or employer who 
shall pay workers or employees at less than the standard 
prevailing wage as established under the public works 
contract shall forfeit to the contracting agency the sum of 
$25 a day for each worker so underpaid. 

(2) Whenever it shall appear to the contracting agency 
or to the Montana commissioner of labor that there are 
insufficient moneys due to the contractor or the employer 
under the terms of the contract to cover such penalties, the 
Montana commissioner of labor may, within 90 days after the 
filing of notice of completion of the project and its 
acceptance by the contracting agency, maintain an action in 
district court to recover all such penalties and forfeitures 
due. Nothing in this part shall prevent the individual 
worker who has been underpaid from maintaining an action for 
recovery of the wages due under the contract as provided in 
Title 39, chapter 3, part 2. 

18-2-408. Penalty for violation. (1) If any person, 
firm, or corporation shall fail to comply with the 
provisions of this part, the state, county, municipal, or 
school officers who have executed the contract shall retain 
$1,000 of the contract price as liquidated damages for the 
violation of the terms of the contract and said money shall 
be credited to the proper funds of the state, county, 
municipal, or school districts. 

(2) Any firm or corporation violating the provisions 
of this part shall have his or its license suspended in the 
manner prescribed by 37-71-301 for a period of 1 year after 
the date of final judgment of said violation by any district 
court or the supreme court. 

(3) Whenever any action shall have been instituted in 
any district court in this state against any person, firm, 
or corporation for the violation of this part, the court in 
which said action is pending shall be and it is hereby 
authorized to issue an injunction to restrain any such 
person, firm, or corporation from proceeding with his or its 



204 



contract with the state, county, municipal, or school 
districts, pending the final determination of said action so 
instituted. 

18-2-409 through 18-2-420 reserved. 

18-2-421. Notice. When a public works project is 
accepted by the public contracting agency, a notice of 
acceptance and the completion date of the project shall be 
sent to the department. However, in the case of projects 
that amount to $50,000 or less in cost, the notice of 
acceptance and the completion date of the project is not 
required unless the department requests that information. 
The 90-day limitation for filing an action in district court 
as provided in 18-2-407 does not begin until the public 
contracting agency notifies the department of its acceptance 
of the public works project. 

18-2-422. Bid specification and contract to contain 
prevailing wage rate. All bid specifications and contracts 
for public works projects must contain a provision stating 
for each job classification the prevailing wage rate, 
including fringe benefits, that the contractors and 
subcontractors must pay during construction of the project. 

18-2-423. Submission of payroll records. If a 
complaint is filed with the department alleging 
noncompliance with 18-2-422, the department may require the 
project to submit to it certified copies of the payroll 
records for workers employed on that project. 

18-2-424. Enforcement. If a contractor or a 
subcontractor refuses to submit payroll records requested by 
the department pursuant to 18-2-423, the commissioner or his 
authorized representative may issue subpoenas compelling the 
production of those records. 



- 205 



CHILD LABOR 

Part 1 -- Prohibited Employment of Children 

Section 

41-2-101. Employment of children prohibited -- when. 

41-2-102 through 41-2-110 reserved. 

41-2-111. Liability of parent. 

41-2-112. Record of children under the age of sixteen 

years . 
41-2-113. Age certificates. 
41-2-114. Enforcement. 
41-2-115 through 41-2-120 reserved. 
41-2-121. Penalties. 



41-2-101. Employment of children prohibited -- when. 
Any person, company, firm, association, or corporation 
engaged in business in this state or any agent, officer, 
foreman, or other employee having control or management of 
employees or having the power to hire or discharge employees 
who shall knowingly employ or permit to be employed any 
child under the age of 16 years to render or perform any 
service or labor, whether under contract of employment or 
otherwise, in, on, or about any mine; mill; smelter; 
workshop; factory; steam, electric, hydraulic, or 
compressed-air railroad; or passenger or freight elevator or 
where any machinery is operated or for any telegraph, 
telephone, or messenger company or in any occupation not 
herein enumerated which is known to be dangerous or 
unhealthful or which may be in any way detrimental to the 
morals of said child shall be guilty of a misdemeanor and 
punishable as hereinafter provided. 

41-2-102 through 41-2-110 reserved. 

41-2-111. Liability of parent. Any parent, guardian, 
or other person having the care, custody, or control of any 
child under the age of 16 years who shall permit, suffer, or 
allow any such child to work or perform service for any 
person, company, firm, association, or corporation doing 
business in this state or who shall permit or allow any such 
child over whom he has such care, custody, or control to 
retain such employment as is prohibited in 41-2-101, whether 
under contract of employment or not, shall be guilty of a 
misdemeanor and punishable as hereinafter provided. 

41-2-112. Record of children under the age of sixteen 
years . The commissioner of labor and industry shall compile 
and preserve in his office from reports made to him by the 
county superintendents of schools, as otherwise provided, a 
full and complete list of the name, age, date of birth, and 
sex of each child and the names of the parents or guardians 
of each child under the age of 16 years who is now or may 



206 



hereafter become a resident of this state, and such list 
shall be the official record of the age of children in this 
state. 

41-2-113. Age certificates. Upon obtaining the age of 
16 years any child may make application to the commissioner 
of labor and industry for an age certificate, which must be 
presented to any employer with whom the child seeks 
employment. The employer, if such employment be given, must 
countersign the certificate and return it to the 
commissioner, who shall keep it on file in his office. Any 
person, firm, company, association, or corporation who 
employs or permits to be employed in any occupation 
prohibited by 41-2-101 any child without such certificate 
showing the child to be at least 16 years of age is guilty 
of a misdemeanor and punishable as hereinafter provided 
should such child prove to be less than 16 years of age. 

41-2-114. Enforcement. To enforce this part the 
commissioner of labor and industry and each county attorney 
shall, each upon his own volition or upon the sworn 
complaint of any reputable citizen that this part is being 
violated, make prosecutions for such violations. 

41-2-115 through 41-2-120 reserved. 

41-2-121. Penalties. Every person, firm, company, 
association, or corporation who violates any of the 
provisions of this part shall be guilty of a misdemeanor and >H 
upon conviction thereof shall be punished by a fine of not 
less than $25 or more than $500 or by imprisonment in the 
county jail for a period of not less than 30 days or more 
than 6 months or by both such fine and imprisonment. 



207 - 



VETERANS 

Part 2 -- Employment 

10-2-201. Purpose. 

10-2-202. Definitions. 

10-2-203. Preference in appointment and employment. 

10-2-204. Credit for examination. 

10-2-205. Eligibility. 

10-2-206. Enforcement of preference. 

10-2-207 through 10-2-210 reserved. 

10-2-211. Reemployment of veterans upon completion of 

service . 
10-2-212. Private employer's duty. 
10-2-213. Restoration of benefits. 
10-2-214. Enforcement procedure. 
10-2-215 through 10-2-220 reserved. 
10-2-221. Reemployment of public employee upon completion 

of service. 
10-2-222. Application for reemployment. 
10-2-223. Application for reinstatement of officer. 
10-2-224. Reinstatement for remainder of term. 
10-2-225. No loss of seniority or benefits. 
10-2-226. Enforcement. 

10-2-227. Acting officer -- how appointed. 
10-2-228. Absence for military service creates no vacancy 

in office. 



10-2-201. Purpose. The purpose of 10-2-201 through 
10-2-206 is to provide for preference of veterans, their 
dependents and unremarried surviving spouses, and certain 
disabled civilians in appointment and employment in every 
public department and upon all public works of the state of 
Montana and of any county and city thereof. 

10-2-202. Definitions. For purposes of 10-2-201 
through 10-2-206, the following definitions apply: 

(1) The term "veterans" means persons: 

(a) who served in the armed forces of the United 
States in time of war or declared national emergency and who 
have been separated from service upon conditions other than 
dishonorable; or 

(b) who after January 31, 1955: 

(i) served on active military duty for more than 180 
days or were discharged or released because of a 
service-connected disability; and 

(ii) were honorably discharged. 

(2) The term "war or declared national emergency" 
includes: 

(a) The Civil War; 

(b) The Spanish-American War; 

(c) The Philippine insurrection; 

(d) World War I, between April 6, 1917, and November 



- 208 



11, 1918, both dates inclusive; 

(e) World War II, between September 16, 1940, and 
December 31, 1946, both dates inclusive; 

(f) The Korean conflict, military expedition, or 
police action, between June 26, 1950, and January 31, 1955, 
both dates inclusive; and 

(g) The Vietnam conflict between August 5, 1964, and 
May 7, 1975, both dates inclusive. 

(3) The term "surviving spouse" means an unremarried 
surviving spouse of a veteran. 

(4) The word "percent" means percent of the total 
aggregate points of the examination referred to. 

10-2-203. Preference in appointment and employment. 
(1) In every public department and upon all public works of 
the state of Montana and of any county or city thereof, the 
following shall be preferred for appointment and employment: 
veterans, their spouses and surviving spouses, and the other 
dependents of disabled veterans and disabled civilians 
recommended by the rehabilitative services division of the 
department of social and rehabilitation services. 

(2) Age, loss of limb, or other physical impairment 
which does not in fact incapacitate does not disqualify any 
disabled veteran or civilian provided he or she possesses 
the business capacity, competency, and education to 
discharge the duties of the position involved. 

(3) Those of the above-described veterans who have 
disabilities admitted by the veterans administration of the 
United States to have been incurred in service in any of the 
wars, military expeditions, or police actions, whenever such 
disabilities do not in fact incapacitate, shall be given 
preference in employment over other veterans. 

10-2-204. Credit for examination. (1) When written or 
oral examinations are required for employment, disabled 
veterans and their spouses, their surviving spouses, and 
other dependents shall have added to their examination 
ratings a credit of 10 points. All other veterans, their 
spouses, surviving spouses, and dependents shall have added 
to their examination ratings a credit of 5 points. 

(2) The fact that an applicant has claimed a veterans' 
credit may not be made known to the examiners until ratings 
of all applicants have been recorded, after which such 
credits shall be added to the examination rating and the 
records shall show the examination rating and the veteran's 
credit. 

(3) The benefits of this section are in addition to 
and not in derogation of the preference in appointment and 
employment or both given by 10-2-203. 

10-2-205. Eligibility. (1) None of the benefits of 
10-2-201 through 10-2-206 accrue to any person who refused 
to serve on active duty in the military service to which 
attached or to take up arms in the defense of the United 
States. 

(2) No person who has not been a resident of Montana 
for at least 1 year immediately preceding an appointment is 



- 209 _ 



I 



entitled to such preference. 

(3) For city or county employment, no preference will 
e granted unless an applicant under 10-2-201 through 
0-2-206 is also a resident of the city or town or county in 

which employment is sought. 



ft 



10-2-206. Enforcement of preference. Any person 
entitled to preference in 10-2-201 through 10-2-206 who has 
applied for any appointment or employment upon public works 
of the state of Montana or any county and city thereof or in 
any public department of the state and who has been denied 
employment or appointment and feels that the spirit of 
10-2-201 through 10-2-206 has been violated and that such 
person is in fact qualified physically and mentally and 
possesses business capacity, competency, and education to 
discharge the duties of the position applied for may 
petition by verified petition the district court of the 
state of Montana in the county in which the work is to be 
performed. The petition shall set forth the facts of the 
application, qualifications, competency, and such person's 
honorable discharge or other qualifications warranting the 
applicant to preference under 10-2-201 through 10-2-206. 
Upon filing of such petition, any judge in the court shall 
issue an order to show cause to the appointing authority 
directing the appointing authority to appear in the court at 
a specified time and place, not less than 5 or more than 10 
days after the filing of the verified petition, to show 
cause, if any exists, why the veteran or person entitled to 
reference should not be employed by the appointing 
uthority. The district court has jurisdiction upon the 
proper showings to issue its order directing and ordering 
the appointing authority to comply with this law in giving 
the preference provided for. 

10-2-207 through 10-2-210 reserved. 

10-2-211. Reemployment of veterans upon completion of 
service. (1) Any person inducted into the armed forces of 
the United States as a result of the operation of any 
selective training and service act or national guard and 
reserve officers mobilization act since 1948 who has 
satisfactorily completed his period of training or service 
as attested by a certificate to that effect shall be 
reemployed in the position he left in order to perform such 
training or service if: / 

(a) he is still qualified to perform the duties of the 
position; 

(b) the position he formerly held was not a temporary 
one ; and 

(c) he makes application for reemployment within 40 
days after he is retired from training or service. 

(2) Should any person qualified for reemployment be a 

schoolteacher or instructor, the board of trustees or other 

^mploying agency of the school involved is not obligated to 

pehire the person until the beginning of the semester or 

quarter following the one in which the application for 

reemployment was made. 



210 - 



10-2-212. Private employer's duty. If such person was 
in the employ of a private employer, such employer shall 
restore such person to such position or to a position of 
like seniority, status, and pay unless the employer's 
circumstances have so changed as to make it impossible or 
unreasonable to do so. 

10-2-213. Restoration of benefits. Any person who is 
restored to a position in accordance with 10-2-211 or 
10-2-212 shall be considered as having been on leave of 
absence during the period of training or service in the 
armed forces of the United States and at the expiration of 
the period shall be entitled to be restored to his 
employment without loss of seniority, shall be entitled to 
participate in insurance or other benefits offered by the 
employer in accordance with established rules and practices 
relating to employees on leave of absence, and shall not be 
discharged from the position without cause within 1 year 
after restoration. 

10-2-214. Enforcement procedure. In case any private 
employer refuses to reemploy any person entitled to 
reemployment under the provisions of 10-2-211 through 
10-2-214, the district court of the judicial district in 
which such private employer maintains his place of business 
has power, upon the filing of a motion, petition, or other 
appropriate pleading by the person entitled to such 
benefits, to specifically require such employer to comply 
with 10-2-211 through 10-2-214, and, as an incident thereto, 
to compensate such person for any loss of wages or benefits 
suffered by such employer's unlawful action. Upon 
application to the county attorney of the county in which 
such private employer maintains a place of business by any 
person claiming to be entitled to redress under 10-2-211 
through 10-2-214, the county attorney shall appear and act 
as attorney for such person in the amicable settlement of 
the claim or in the filing of any motion, petition, or other 
appropriate pleading to specifically require such employer 
to comply with such provisions. No fees or court costs may 
be taxed against the person applying for such benefits. 

10-2-215 through 10-2-220 reserved. 

10-2-221. Reemployment of public employee upon 
completion of service. Any person inducted into the armed 
forces of the United States or any member of any reserve 
component of the armed forces or national guard or any 
retired personnel ordered into the active military service 
of the United States who, in order to perform such training, 
service, or active duty, leaves a position, other than a 
temporary position, in the employ of the state or any 
political subdivision thereof and who receives a certificate 
of completion of training or service from the proper 
authorities of the United States government and is still 
qualified to perform the duties of such position shall be 
restored to: 

(1) the position or to a position of like seniority, 



211 



status, and pay if the position was in the employ of the 
state or any political subdivision thereof, excluding 
elective positions, and the position or department has not 
been abolished or consolidated; or 

(2) the position, status, and pay at any time during 
the term for which he was elected if the position was that 
of an elected, executive, or judicial officer of the state 
or any political subdivision thereof. 

10-2-222. Application for reemployment. A person 
asking restoration to a position in accordance with the 
provisions of 10-2-221(1) shall, in order to qualify for the 
restoration of such position, make application for 
reemployment within 40 days after he is relieved from such 
training and service. Such application must be in writing 
and presented to the officer, district, board, or employing 
unit of the state or political subdivision thereof by which 
such applicant was formerly employed. 

10-2-223. Application for reinstatement of officer. A 
person seeking restoration to an elective office in 
accordance with the provisions of 10-2-221(2) shall, in 
order to qualify under the provisions of that section, make 
application for reinstatement to such office within 40 days 
after he is relieved from such training and service. Such 
applications must be in writing and presented to the 
governor in the case of state elective offices and to the 
board of county commissioners in the case of county, 
township, or district offices. 

10-2-224. Reinstatement for remainder of term. Any 
person who is restored to a position in accordance with the 
provisions of 10-2-221(2) shall be considered as having been 
on leave of absence during his period of active military 
service and shall be immediately so restored to his official 
position as such officer for the balance of the term for 
which he was elected. 

10-2-225. No loss of seniority or benefits. Any person 
who is restored to a position in accordance with the 
provisions of 10-2-221(1) shall be considered as having been 
on furlough or leave of absence during his period of 
training and service in the land or naval forces, shall be 
so restored without loss of seniority (if seniority rules 
are applicable in such particular position) , shall be 
entitled to participate in any insurance or other benefits 
offered by the state of Montana or the political subdivision 
thereof pursuant to established rules and practices relating 
to employees on furlough or on leave of absence in effect at 
the time such person is ordered into such service and, 
except as otherwise provided herein, shall not be discharged 
from such position without cause within 1 year after such 
restoration. 

10-2-226. Enforcement. In case of any failure or 
refusal by any officer, board, department, or employing unit 
of the state or any political subdivision thereof to comply 



212 



with the provisions of 10-2-221, 10-2-224, or 10-2-225, the 
district court of the state of Montana for the county in 
which such person seeking restoration of position resides 
shall have the power, upon the filing of a motion, petition, 
or other appropriate pleading by the person entitled to the 
benefits of these provisions, to specifically require such 
officer, department, board, or employing unit to comply with 
such provision for any loss of wages or benefits suffered by 
reason of such an unlawful action. The court shall order a 
speedy hearing in any such case and shall advance it on the 
calendar. Upon application to the county attorney of the 
county in which the applicant resides in the case of county, 
township, and district offices and positions and to the 
attorney general of the state of Montana in the case of 
state offices and positions, by any person claiming to be 
entitled to the benefits of such provisions, such county 
attorney or attorney general, if reasonably satisfied that 
the person so applying is entitled to such benefits, shall 
appear and act as attorney for such person in the amicable 
adjustment of the claim or in the filing of any motion, 
petition, or other appropriate pleading and prosecution 
thereof to specifically require a compliance with such 
provisions; provided that no fees or court costs shall be 
taxed against the person so applying for such benefits. 

10-2-227. Acting officer -- how appointed. The 
governor, in the case of district judges and officers 
elected from the state at large, and the board of county 
commissioners, in the case of members of either house of the 
legislature and county, township, or district officers 
elected from such county, shall appoint an "acting" officer 
to temporarily replace any elected officer, designated in 
10-2-221(2), who enters military service in the manner set 
forth in 10-2-221. "Acting" officers so appointed shall be 
appointed for a period not to exceed the unexpired term of 
the officer whose duties he assumes, and such appointment 
shall be subject to the right of the elected officer to the 
restoration of his position. 

10-2-228. Absence for military service creates no 
vacancy in office. It is specifically provided that the 
provisions of 2-16-112, subsections (5), (6), and (7) of 
2-16-501, and 7-4-2208, shall not be, and the same are 
declared not to be, applicable insofar as they relate to 
absence or residence of any officer of the state or 
political subdivision thereof caused by the military service 
of such officer as set forth in 10-2-221. It is specifically 
declared that the absence of such officer caused by such 
military service shall not create a vacancy in the office to 
which he was elected. 



213 



BASIC RIGHTS 

Part 1 -- Basic Personal Rights 

Section 

49-1-101. Right of protection from personal injury. 

49-1-102. Freedom from discrimination. 

49-1-103. Right to use force. 



Part 2 -- Basic Political Rights 

49-1-201. Right to state's protection. 

49-1-202. Right to hold elected office. 

49-1-203. Rights and duties of electors as compared to 

nonelectors . 
49-1-204. Rights and duties of citizens of other states. 



49-1-101. Right of protection from personal injury. 
Besides the personal rights mentioned or recognized in other 
statutes and subject to the qualifications and restrictions 
provided by law, every person has the right of protection 
from bodily restraint or harm, personal insult, defamation, 
and injury to his personal relations. 

49-1-102. Freedom from discrimination. The right to be 
free from discrimination because of race, creed, religion, 
color, sex, physical or mental handicap, age, or national 
origin is recognized as and declared to be a civil right. 
This right shall include but not be limited to: 

(1) the right to obtain and hold employment without 
discrimination; and 

(2) the right to the full enjoyment of any of the 
accommodation facilities or privileges of any place of 
public resort, accommodation, assemblage, or amusement. 

49-1-103. Right to use force. Any necessary force may 
be used to protect from wrongful injury the person or 
property of one's self, of a wife, husband, child, parent, 
or other relative or member of one's family, or of a ward, 
servant, master, or guest. 

49-1-201. Right to state's protection. Every person 
while within the jurisdiction of this state is entitled to 
its protection. 

49-1-202. Right to hold elected office. Every elector 
is eligible to the office for which he is an elector, except 
where otherwise specially provided. 

49-1-203. Rights and duties of electors as c ompared to 
nonelectors . An elector has no rights or duties beyond those 
of a citizen not an elector, except the right and duty of 



- 214 - 



holding and electing to office. 

49-1-204. Rights and duties of citizens of other 
states . A citizen of the United States who is not a citizen 
of this state has the same rights and duties as a citizen of 
this state not an elector. 



11 



215 



ILLEGAL DISCRIMINATION 
Part 1 -- General Provisions 



Section 

49-2-101. Definitions. 

49-2-102. Records to be kept 



Part 2 -- Commission for Human Rights 

49-2-201. Commission staff. 

49-2-202. Authority to require posted notice. 

49-2-203. Subpoena power. 

49-2-204. Commission to adopt rules. 



Part 3 -- Prohibited Discriminatory Practices 

49-2-301. Retaliation prohibited. 

49-2-302. Aiding, coercing, or attempting. 

49-2-303. Discrimination in employment. 

49-2-304. Discrimination in public accommodations. 

49-2-305. Discrimination in housing. 

49-2-306. Discrimination in financing and credit 

transactions . 

49-2-307. Discrimination in education. 

49-2-308. Discrimination by the state. 

k9-2-309. Discrimination in insurance and retirement plans. 

R9-2-310. Maternity leave -- unlawful acts of employers. 

49-2-311. Reinstatement to job following pregnancy-related 

leave of absence. 



Part 4 -- Exceptions to Prohibitions 

49-2-401. Procedure for claiming exemption. 

49-2-402. "Reasonable" to be strictly construed. 

49-2-403. Specific limits on justification. 

49-2-404. Distinctions permitted for modesty or privacy 



Part 5 -- Enforcement by Commission 

49-2-501. Filing complaints. 

49-2-502. Notification of and action by commission. 

49-2-503. Temporary relief by court order. 

49-2-504. Informal settlement. 

49-2-505. Contested case hearing. 

49-2-506. Procedure upon a finding of discrimination. 

49-2-507. Procedure upon failure to find discrimination 

49-2-508. Injunction to enforce commission order. 

49-2-509. Filing a complaint in district court. 



Part 6 -- Penalties 



216 



49-2-601. Criminal penalty. 



< 



49-2-101. Definitions. As used in this chapter, unless 
the context requires otherwise, the following definitions 
apply: 

(1) "Age" means number of years since birth. It does 
not mean level of maturity or ability to handle 
responsibility. These latter criteria may represent 
legitimate considerations as reasonable grounds for 
discrimination without reference to age. 

(2) "Commission" means the commission for human rights 
provided for in 2-15-1706. 

(3) "Credit" means the right granted by a creditor to 
a person to defer payment of a debt, to incur debt and defer 
its payment, or to purchase property or services and defer 
payment therefor. It includes without limitation the right 
to incur and defer debt which is secured by residential real 
property. 

(4) "Credit transaction" means any invitation to apply 
for credit, application for credit, extension of credit, or 
credit sale. 

(5) "Creditor" means a person who, regularly or as a 
part of his business, arranges for the extension of credit 
for which the payment of a financial charge or interest is 
required, whether in connection with loans, sale of property f L 
or services, or otherwise. 

(6) "Educational institution" means a public or 
private institution and includes an academy; college; 
elementary or secondary school; extension course; 
kindergarten; nursery; school system; university; business, 
nursing, professional, secretarial, technical, or vocational 
school; or agent of an educational institution. 

(7) "Employee" means any individual employed by an 
employer. 

(8) "Employer" means an employer of one or more 
persons but does not include a fraternal, charitable, or 
religious association or corporation if the association or 
corporation is not organized either for private profit or to 
provide accommodations or services that are available on a 
nonmembership basis. 

(9) "Employment agency" means a person undertaking to 
procure employees or opportunities to work. 

(10) "Financial institution" means a commercial bank, 
trust company, savings bank, finance company, savings and 
loan association, investment company, or insurance company. 

(11) "Housing accommodation" means a building or 
portion of a building, whether constructed or to be 
constructed, which is or will be used as the sleeping 
quarters of its occupants. 

(12) "Labor organization" means an organization or an 
agent of an organization organized for the purpose, in whole 
or in part, of collective bargaining, of dealing with 
employers concerning grievances or terms or conditions of 



- 217 



employment, or of other mutual aid and protection of 
employees . 

(13) "Mental handicap" means any mental disability 
resulting in subaverage intellectual functioning or impaired 
social competence. 

(14) "National origin" means ancestry. 

(15) "Person" means one or more individuals, labor 
unions, partnerships, associations, corporations, legal 
representatives, mutual companies, joint-stock companies, 
trusts, unincorporated employees' associations, employers, 
employment agencies, or labor organizations. 

(16) "Physical handicap" means a physical disability, 
infirmity, malformation, or disfigurement which is caused by 
bodily injury, birth defect, or illness, including epilepsy. 
It includes without limitation any degree of paralysis; 
amputation; lack of physical coordination; blindness or 
visual impediment; deafness or hearing impediment; muteness 
or speech impediment; or physical reliance on a guide dog 
for the blind, a wheelchair, or any other remedial appliance 
or device. 

(17) "Public accommodation" means a place which caters 
or offers its services, goods, or facilities to the general 
public subject only to the conditions and limitations 
established by law and applicable to all persons alike. It 
includes without limitation a public inn, restaurant, eating 
house, hotel, roadhouse, place where food or alcoholic 
beverages or malt liquors are sold for consumption, motel, 
soda fountain, soft drink parlor, tavern, nightclub, trailer 
park, resort, campground, barbershop, beauty parlor, 
bathroom, resthouse, theater, swimming pool, skating rink, 
golf course, cafe, ice cream parlor, transportation company, 
or hospital and all other public amusement and business 
establishments. 

(18) "Staff" or "commission staff" means the staff of 
the commission for human rights. 

49-2-102. Records to be kept. The state, employers, 
labor organizations, and employment agencies shall maintain 
records on age, sex, and race that are required to 
administer the civil rights laws and regulations. These 
records are confidential and available only to federal and 
state personnel legally charged with administering civil 
rights laws and regulations. However, statistical 
information compiled from records on age, sex, and race 
shall be made available to the general public. 

49-2-201. Commission staff. (1) The staff may include 
an attorney as legal counsel. He shall advise the commission 
in legal matters arising in the discharge of its duties, 
assist in the preparation and presentation of complaints to 
the commission, and represent the commission in legal 
actions to which it is a party. The attorney general shall 
perform this function at the request of the commission. 

(2) In addition the commission may appoint hearing 
examiners to hear contested cases and petitions for 
declaratory rulings. 



- 218 



49-2-202. Authority to require posted notice. The 
commission may require any employer, employment agency, 
labor union, educational institution, or financial 
institution or the owner, lessee, manager, agent, or 
employee of any public accommodation or housing 
accommodation subject to this chapter to post, in a 
conspicuous place on his premises or in the accommodation, a 
notice to be prepared or approved by the commission 
containing relevant information that the commission 
considers necessary to explain this chapter. Any person or 
institution subject to this section who refuses to comply 
with an order of the commission respecting the posting of a 
notice is guilty of a misdemeanor and punishable by a fine 
of not more than $50. 

49-2-203. Subpoena power. (1) The commission may 
subpoena witnesses, take the testimony of any person under 
oath, administer oaths, and, in connection therewith, 
require the production for examination of books, papers, or 
other tangible evidence relating to a matter either under 
investigation by the commission staff or in question before 
the commission. The commission may delegate the foregoing 
powers to a person within the staff for the purpose of 
investigating a complaint. 

(2) Subpoenas issued pursuant to this section may be 
enforced as provided in 2-4-104 of the Montana 
Administrative Procedure Act. 

49-2-204. Commission to adopt rules. The commission 
shall adopt procedural and substantive rules necessary to 
implement this chapter. Rulemaking procedures shall comply 
with the requirements of the Montana Administrative 
Procedure Act. 

49-2-301. Retaliation prohibited. It is an unlawful 
discriminatory practice for a person, educational 
institution, financial institution, or governmental entity 
or agency to discharge, expel, blacklist, or otherwise 
discriminate against an individual because he has opposed 
any practices forbidden under this chapter or because he has 
filed a complaint, testified, assisted, or participated in 
any manner in an investigation or proceeding under this 
chapter . 

49-2-302. Aiding, coercing, or attempting. It is 
unlawful for a person, educational institution, financial 
institution, or governmental entity or agency to aid, abet, 
incite, compel, or coerce the doing of an act forbidden 
under this chapter or to attempt to do so. 

49-2-303. Discrimination in employment. (1) It is an 
unlawful discriminatory practice for: 

(a) an employer to refuse employment to a person, to 
bar him from employment, or to discriminate against him in 
compensation or in a term, condition, or privilege of 
employment because of his race, creed, religion, color, or 
national origin or because of his age, physical or mental 



219 



handicap, marital status, or sex when the reasonable demands 
of the position do not require an age, physical or mental 
handicap, marital status, or sex distinction; 

(b) a labor organization or joint labor management 
committee controlling apprenticeship to exclude or expel any 
person from its membership or from an apprenticeship or 
training program or to discriminate in any way against a 
member of or an applicant to the labor organization or an 
employer or employee because of race, creed, religion, 
color, or national origin or because of his age, physical or 
mental handicap, marital status, or sex when the reasonable 
demands of the program do not require an age, physical or 
mental handicap, marital status, or sex distinction; 

(c) an employer or employment agency to print or 
circulate or cause to be printed or circulated a statement, 
advertisement, or publication or to use an employment 
application which expresses, directly or indirectly, a 
limitation, specification, or discrimination as to sex, 
marital status, age, physical or mental handicap, race, 
creed, religion, color, or national origin or an intent to 
make the limitation, unless based upon a bona fide 
occupational qualification; 

(d) an employment agency to fail or refuse to refer 
for employment, to classify, or otherwise to discriminate 
against any individual because of sex, marital status, age, 
physical or mental handicap, race, creed, religion, color, 
or national origin, unless based upon a bona fide 
occupational qualification. 

(2) The exceptions permitted in subsection (1) based 
on bona fide occupational qualifications shall be strictly 
construed. 

49-2-304. Discrimination in public accommodations. 
Except when the distinction is based on reasonable grounds, 
it is an unlawful discriminatory practice for the owner, 
lessee, manager, agent, or employee of a public 
accommodation: 

(1) to refuse, withhold from, or deny to a person any 
of its services, goods, facilities, advantages, or 
privileges because of sex, race, age, physical or mental 
handicap, creed, religion, color, or national origin; 

(2) to publish, circulate, issue, display, post, or 
mail a written or printed communication, notice, or 
advertisement which states or implies that any of the 
services, goods, facilities, advantages, or privileges of 
the public accommodation will be refused, withheld from, or 
denied to a person of a certain race, creed, religion, sex, 
age, physical or mental handicap, color, or national origin. 

49-2-305. Discrimination in housing. (1) Except when 
the distinction is based on reasonable grounds, it is an 
unlawful discriminatory practice for the owner, lessee, 
manager, or other person having the right to sell, lease, or 
rent a housing accommodation or improved or unimproved 
property: 

(a) to refuse to sell, lease, or rent the housing 
accommodation or property to a person because of sex, race, 



- 220 



creed, religion, color, age, physical or mental handicap, or 
national origin; 

(b) to discriminate against a person because of sex, 
race, creed, religion, age, physical or mental handicap, f 
color, or national origin in a term, condition, or privilege 
relating to the use, sale, lease, or rental of the housing 
accommodation or property; 

(c) to make a written or oral inquiry or record of the 
sex, race, creed, religion, age, physical or mental 
handicap, color, or national origin of a person seeking to 
buy, lease, or rent the housing accommodation or property; 
or 

(d) to refuse to negotiate for a sale or to make a 
housing accommodation or property unavailable because of 
sex, race, creed, religion, age, physical or mental 
handicap, color, or national origin. 

(2) A private residence designed for single-family 
occupancy in which sleeping space is rented to guests and in 
which the landlord also resides is excluded from the 
provisions of subsection (1). 

(3) It is also an unlawful discriminatory practice to 
make, print, or publish or cause to be made, printed, or 
published any notice, statement, or advertisement that 
indicates any preference, limitation, or discrimination that 
is prohibited by subsection (1) or any intention to make or 
have such a preference, limitation, or discrimination. 



49-2-306. Discrimination in financing and credit 
transactions. (1) It is an unlawful discriminatory practice 
for a financial institution, upon receiving an application 
for financial assistance, to permit an official or employee, 
during the execution of his duties, to discriminate against 
the applicant because of sex, marital status, race, creed, 
religion, age, physical or mental handicap, color, or 
national origin in a term, condition, or privilege relating 
to the obtainment or use of the institution's financial 
assistance, unless based on reasonable grounds. 

(2) It is an unlawful discriminatory practice for a 
creditor to discriminate on the basis of race, color, 
religion, creed, national origin, age, mental or physical 
handicap, sex, or marital status against any person in any 
credit transaction which is subject to the jurisdiction of 
any state or federal court of record. 

49-2-307. Discrimination in education. It is an 
unlawful discriminatory practice for an educational 
institution: 

(1) to exclude, expel, limit, or otherwise 
discriminate against an individual seeking admission as a 
student or an individual enrolled as a student in the terms, 
conditions, or privileges of the institution because of 
race, creed, religion, sex, marital status, color, age, 
physical handicap, or national origin or because of mental 
handicap, unless based on reasonable grounds; 

(2) to make or use a written or oral inquiry or form 
of application for admission that elicits or attempts to 
elicit information or to make or keep a record concerning 



221 



c 



( 



the race, color, sex, marital status, age, creed, religion, 
physical or mental handicap, or national origin of an 
applicant for admission, except as permitted by regulations 
of the commission; 

(3) to print, publish, or cause to be printed or 
published a catalog or other notice or advertisement 
indicating a limitation, specification, or discrimination 
based on the race, color, creed, religion, age, physical or 
mental handicap, sex, marital status, or national origin of 
an applicant for admission; or 

(4) to announce or follow a policy of denial or 
limitation of educational opportunities of a group or its 
members, through a quota or otherwise, because of race, 
color, sex, marital status, age, creed, religion, physical 
or mental handicap, or national origin. 

49-2-308. Discrimination by the state. It is an 
unlawful discriminatory practice for the state or any of its 
political subdivisions: 

(1) to refuse, withhold from, or deny to a person any 
local, state, or federal funds, services, goods, facilities, 
advantages, or privileges because of race, creed, religion, 
sex, marital status, color, age, physical or mental 
handicap, or national origin, unless based on reasonable 
grounds; 

(2) to publish, circulate, issue, display, post, or 
mail a written or printed communication, notice, or 
advertisement which states or implies that any local, state, 
or federal funds, services, goods, facilities, advantages, 
or privileges of the office or agency will be refused, 
withheld from, or denied to a person of a certain race, 
creed, religion, sex, marital status, color, age, physical 
or mental handicap, or national origin or that the patronage 
of a person of a particular race, creed, religion, sex, 
marital status, color, age, or national origin or possessing 
a physical or mental handicap is unwelcome or not desired or 
solicited, unless based on reasonable grounds; 

(3) to refuse employment to a person, to bar him from 
employment, or to discriminate against him in compensation 
or in a term, condition, or privilege of employment because 
of his political beliefs. However, this prohibition does not 
apply to policymaking positions on the immediate staff of an 
elected officer of the executive branch provided for in 
Article VI, section 1, of the Montana constitution, to the 
appointment by the governor of a director of a principal 
department provided for in Article VI, section 7, of the 
Montana constitution, or to the immediate staff of the 
majority and minority leadership of the Montana legislature. 

49-2-309. Discrimination in insurance and retirement 
plans. (1) It is an unlawful discriminatory practice for any 
financial institution or person to discriminate solely on 
the basis of sex or marital status in the issuance or 
operation of any type of insurance policy, plan, or coverage 
or in any pension or retirement plan, program, or coverage, 
including discrimination in regard to rates or premiums and 
payments or benefits. 



222 - 



(2) This section does not apply to any insurance 
policy, plan, coverage, or any pension or retirement plan, 
program, or coverage in effect prior to October 1, 1985. 

49-2-310. Maternity leave -- unlawful acts of ( 
employers . It shall be unlawful for an employer or his agent 
to: 

(1) terminate a woman's employment because of her 
pregnancy; 

(2) refuse to grant to the employee a reasonable leave 
of absence for such pregnancy; 

(3) deny to the employee who is disabled as a result 
of pregnancy any compensation to which she is entitled as a 
result of the accumulation of disability or leave benefits 
accrued pursuant to plans maintained by her employer, 
provided that the employer may require disability as a 
result of pregnancy to be verified by medical certification 
that the employee is not able to perform her employment 
duties; or 

(4) require that an employee take a mandatory 
maternity leave for an unreasonable length of time. 

49-2-311. Reinstatement to job following 

pregnancy-related leave of absence. Upon signifying her 
intent to return at the end of her leave of absence, such 
employee shall be reinstated to her original job or to an 
equivalent position with equivalent pay and accumulated 
seniority, retirement, fringe benefits, and other service 
credits unless, in the case of a private employer, the 
employer's circumstances have so changed as to make it ^ 
impossible or unreasonable to do so. 

49-2-401. Procedure for claiming exemption. A person, 
educational institution, financial institution, or 
governmental entity or agency who or which seeks to be 
exempted from the requirements of part 3 of this chapter may 
petition the commission for a declaratory ruling as provided 
in 2-4-501 of the Montana Administrative Procedure Act. If 
the commission finds that reasonable grounds for granting an 
exemption exist, it may issue a ruling exempting the 
petitioner from the particular provision. This section, 
however, shall be strictly construed, and the burden is on 
the petitioner to demonstrate that an exemption should be 
granted. 

49-2-402. "Reasonable" to be strictly construed. Any 
grounds urged as a "reasonable" basis for an exemption under 
any section of this chapter shall be strictly construed. 

49-2-403. Specific limits on justification. (1) Sex, 
marital status, age, physical or mental handicap, race, 
creed, religion, color, or national origin may not comprise 
justification for discrimination unless the nature of the 
service requires the discrimination for the legally 
demonstrable purpose of correcting a previous discriminatory 
practice. * ( 

(2) Age or mental handicap may represent a legitimate 



223 



discriminatory criterion in credit transactions only as it 
relates to a person's capacity to make or be bound by 
contracts or other obligations. 

49-2-404. Distinctions permitted for modesty or 
privacy. Separate lavatory, bathing, or dressing facilities 
based on the distinction of sex may be maintained for the 
purpose of modesty or privacy. 

49-2-501. Filing complaints. (1) A complaint may be 
filed by or on behalf of any person claiming to be aggrieved 
by any discriminatory practice prohibited by this chapter. 
The complaint must be in the form of a written, verified 
complaint stating the name and address of the person, 
educational institution, financial institution, or 
governmental entity or agency alleged to have engaged in the 
discriminatory practice and the particulars of the alleged 
discriminatory practice. The commission staff may file a 
complaint in like manner when a discriminatory practice 
comes to its attention. 

(2) A complaint under this chapter must be filed with 
the commission within 180 days after the alleged unlawful 
discriminatory practice occurred or was discovered. Any 
complaint not filed within the time set forth herein may not 
be considered by the commission. 

49-2-502. Notification of and action by commission. 
The staff shall notify the commission in writing of all 
complaints filed with the commission. The commission shall 
meet a minimum of four times a year to hear and act upon all 
complaints filed. 

49-2-503. Temporary relief by court order. ( 1 ) At any 
time after a complaint is filed under this chapter alleging 
an unlawful discriminatory practice, the commission may file 
a petition in the district court in the county in which the 
subject of the complaint occurs or in the county in which a 
respondent resides or transacts business seeking appropriate 
temporary relief against this practice, including an order 
restraining the respondent from interfering in any manner 
with an order the commission may enter with respect to the 
complaint. 

(2) The court has the power to grant the temporary 
relief or restraining order it considers just and proper. 
However, no relief or order extending beyond 14 days may be 
granted except by consent of the respondent or upon a 
finding by the court that there is reasonable cause to 
believe that the respondent has engaged in discriminatory 
practices . 

49-2-504. Informal settlement. The commission staff 
shall informally investigate the matters set out in a filed 
complaint promptly and impartially. If the staff determines 
that the allegations are supported by substantial evidence, 
it shall immediately try to eliminate the discriminatory 
practice by conference, conciliation, and persuasion. 



224 - 



49-2-505. Contested case hearing. (1) If the informal 
efforts to eliminate the alleged discrimination are 
unsuccessful, the staff shall inform the commission of the 
failure and the commission shall cause written notice to be 
served, together with a copy of the complaint, requiring the 
person, educational institution, financial institution, or 
governmental entity or agency charged in the complaint to 
answer the allegations of the complaint at a hearing before 
the commission. 

(2) The hearing must be held by the commission in the 
county where the unlawful conduct is alleged to have 
occurred unless the person, institution, entity, or agency 
charged in the complaint or the commission requests a change 
of venue for good cause shown. The case in support of the 
complaint may be presented before the commission by the 
staff, the complainant, or an attorney representing the 
complainant. The hearing and any subsequent proceedings 
under this chapter must be held in accordance with the 
Montana Administrative Procedure Act except as provided in 
49-2-508. 

(3) The commission may make provisions for defraying 
the expenses of an indigent party in a contested case 
hearing held pursuant to this chapter. 

(4) The prevailing party in a hearing under this 
section may bring an action in district court for attorneys' 
fees. The court in its discretion may allow the prevailing 
party reasonable attorneys' fees. An action under this 
section must comply with the Montana Rules of Civil 
Procedure. 

49-2-506. Procedure upon a finding of discrimination. 
(1) If the commission finds that a person, institution, 
entity, or agency against whom a complaint was filed has 
engaged in the discriminatory practice alleged in the 
complaint, the commission shall order him or it to refrain 
from engaging in the discriminatory conduct. The order may: 

(a) prescribe conditions on the accused's future 
conduct relevant to the type of discriminatory practice 
found; 

(b) require any reasonable measure to correct the 
discriminatory practice and to rectify any harm, pecuniary 
or otherwise, to the person discriminated against; 

(c) require a report on the manner of compliance. 

(2) The order may not require the payment of any 
punitive damages. 

(3) Whenever a commission order or conciliation 
agreement requires inspection by the commission staff for a 
period of time to determine if the respondent is complying 
with that order or agreement, the period of time may not be 
more than 3 years. 

49-2-507. Procedure upon failure to find 

discrimination. If the commission finds that a person, 
institution, entity, or agency against whom or which a 
complaint was filed has not eng-aged in the discriminatory 
practice alleged in the complaint, it shall issue and cause 
to be served on the complainant an order dismissing the 



225 



< 



complaint. 

49-2-508. Injunction to enforce commission order. If 
the commission's order is not obeyed, the commission staff 
shall petition the district court in the county where the 
discriminatory practice occurred or in which the respondent 
resides or transacts business to enforce the commission's 
order by injunction. 

49-2-509. Filing a complaint in district court. ( 1) 
The commission staff shall, at the request of either party, 
issue a letter entitling the complainant to file a 
discrimination action in district court if: 

(a) the commission has not yet held a contested case 
hearing pursuant to 49-2-505 and has determined that it will 
be unable to hold a contested case hearing within 12 months 
of the date the complaint was filed under 49-2-501; and 

(b) 180 days have elapsed since the complaint was 
filed and the efforts of the commission staff to settle the 
complaint after informal investigation pursuant to 49-2-504 
have been unsuccessful. 

(2) Within 90 days after receipt of a letter issued by 
the commission pursuant to subsection (1), the complainant 
shall petition the district court in the district in which 
the alleged violation occurred for appropriate relief. If 
the claimant fails to petition the district court within 90 
days after receipt of a letter issued by the commission, the 
claim shall be barred. 

(3) If the district court finds, in an action under 
this section, that a person, institution, entity, or agency 
against whom or which a complaint was filed has engaged in 
the unlawful discriminatory practice alleged in the 
complaint, the court may provide the same relief as 
described in 49-2-506 for a commission order. In addition, 
the court may in its discretion allow the prevailing party 
reasonable attorney fees. 

49-2-601. Criminal penalty. A person, educational 
institution, or financial institution, either public or 
private, or a governmental entity or agency who or which 
willfully engages in an unlawful discriminatory practice 
prohibited by this chapter or willfully resists, prevents, 
impedes, or interferes with the commission, the department, 
or any of its authorized representatives in the performance 
of a duty under this chapter or who or which willfully 
violates an order of the commission or willfully violates 
this chapter in any other manner is guilty of a misdemeanor 
and is punishable by a fine of not more than $500 or by 
imprisonment for not more than 6 months, or both. 



226 - 



( 



' 



GOVERNMENTAL CODE OF FAIR PRACTICES 

Part 1 -- General Provisions 

Section 

49-3-101. Definitions. 

49-3-102. What local governmental units affected. 

49-3-103. Permitted distinctions. 

49-3-104. Quotas not required. 

49-3-105. Procedure for claiming exemption. 

49-3-106. Rulemaking authority. 



Part 2 -- Duties of Governmental Agencies and Officials 

49-3-201. Employment of state and local government 

personnel . 
49-3-202. Employment referrals and placement services. 
49-3-203. Educational, counseling, and training programs. 
49-3-204. Licensing. 
49-3-205. Governmental services. 
49-3-206. Distribution of governmental funds. 
49-3-207. Nondiscrimination provision in all public 

contracts . 
49-3-208. Public accommodations laws. 
49-3-209. Retaliation prohibited. 



Part 3 -- Enforcement and Remedies 

49-3-301. Cooperation with commission for human rights. 

49-3-302. Annual reports to governor. 

49-3-303. Repealed. 

49-3-304. Filing complaints. 

49-3-305. Form of complaint. 

49-3-306. Temporary relief by court order. 

49-3-307. Informal settlement. 

49-3-308. Contested case hearing before commission. 

49-3-309. Procedure upon a finding of discrimination by 

commission. 

49-3-310. Procedure upon failure by commission to find 

discrimination. 

49-3-311. Injunction to enforce commission order. 

49-3-312. Filing a complaint in district court. 



49-3-101. Definitions. As used in this chapter, the 
following definitions apply: 

(1) "Age" means number of years since birth. It does 
not mean level of maturity or ability to handle 
responsibility, which may represent legitimate 
considerations as reasonable grounds for discrimination 
without reference to age. 

(2) "Commission" means the commission for human rights 



227 



provided for in 2-15-1706. 

(3) "Mental handicap" means any mental disability 
resulting in subaverage intellectual functioning or impaired 
social competence. 

(4) "Physical handicap" means a physical disability, 
infirmity, malformation, or disfigurement which is caused by 
bodily injury, birth defect, or illness, including epilepsy. 
It includes without limitation any degree of paralysis; 
amputation; lack of physical coordination; blindness or 
visual impediment; deafness or hearing impediment; muteness 
or speech impediment; or physical reliance on a guide dog 
for the blind, a wheelchair, or any other remedial appliance 
or device. 

(5) "State or local governmental agency" means: 

(a) any branch, department, office, board, bureau, 
commission, agency, university unit, college, or other 
instrumentality of state government; or 

(b) a county, city, town, school district, or other 
unit of local government and any instrumentality of local 
government. 

(6) "Qualifications" means such qualifications as are 
genuinely related to competent performance of the particular 
occupational task. 

49-3-102. What local governmental units affected. 
Local governmental units affected by this chapter include 
all political subdivisions of the state, including school 
districts . 

49-3-103. Permitted distinctions. Nothing in this 
chapter shall prohibit any public or private employer: 

(1) from enforcing a differentiation based on marital 
status, age, or physical or mental handicap when based on a 
bona fide occupational qualification reasonably necessary to 
the normal operation of the particular business or where the 
differentiation is based on reasonable factors other than 
age; 

(2) from observing the terms of a bona fide seniority 
system or any bona fide employee benefit plan, such as a 
retirement, pension, or insurance plan, which is not a 
subterfuge to evade the purposes of this chapter, except 
that no such employee benefit plan shall excuse the failure 
to hire any individual; or 

(3) from discharging or otherwise disciplining an 
individual for good cause. 

49-3-104. Quotas not required. Nothing in this chapter 
shall be construed as requiring the institution of a system 
of quotas for representation of any sex, age, religious, 
racial, ethnic, or other group affected by this chapter. 

49-3-105. Procedure for claiming exemption. A state or 
local governmental agency seeking to apply any exemption 
from the requirements of this chapter may petition the 
commission for a declaratory ruling as provided in 2-4-501 
of the Montana Administrative Procedure Act. If the 
commission finds that reasonable grounds for applying an 



228 



( 



exemption exist, it may issue a ruling exempting the 
petitioner from the particular provision. The burden is on 
the petitioner to demonstrate that an exemption should be 
applied. Any provision in this chapter allowing an 
exemption from its requirements must be strictly construed. 

49-3-106. Rulemaking authority. The commission may 
adopt rules necessary for the implementation of this 
chapter, in accordance with the Montana Administrative 
Procedure Act. The rules may include but are not limited to 
procedural rules for: 

(1) filing of complaints; 

(2) conducting investigations of complaints; 

(3) petitioning for a declaratory ruling, as provided 
in 49-3-105; and 

(4) conduct of hearings. 

49-3-201. Employment of state and local government 
personnel . (1) State and local government officials and 
supervisory personnel shall recruit, appoint, assign, train, 
evaluate, and promote personnel on the basis of merit and 
qualifications without regard to race, color, religion, 
creed, political ideas, sex, age, marital status, physical 
or mental handicap, or national origin. 

(2) All state and local governmental agencies shall: 

(a) promulgate written directives to carry out this 
policy and to guarantee equal employment opportunities at 
all levels of state and local government; 

(b) regularly review their personnel practices to 
assure compliance; and 

(c) conduct continuing orientation and training 
programs with emphasis on human relations and fair 
employment practices. 

(3) The department of administration shall insure that 
the entire examination process, including appraisal of 
qualifications, is free from bias. 

(4) Appointing authorities shall exercise care to 
insure utilization of minority group persons. 

49-3-202. Employment referrals and placement services. 
(1) All state and local governmental agencies, including 
educational institutions, which provide employment referrals 
or placement services to public or private employers shall 
accept job orders on a fair practice basis. A job request 
indicating an intention to exclude a person because of race, 
color, religion, creed, political ideas, sex, age, marital 
status, physical or mental handicap, or national origin 
shall be rejected. 

(2) All state and local governmental agencies shall 
cooperate in programs developed by the commission for human 
rights for the purpose of broadening the base of job 
recruitment and shall further cooperate with employers and 
unions providing such programs. 

(3) The department of labor and industry shall 
cooperate with the commission for human rights in 
encouraging and enforcing compliance by employers and labor 
unions with the policy of this chapter and promotion of 



229 



equal employment opportunities. 

49-3-203. Educational, counseling, and training 

programs . All educational, counseling, and vocational 
guidance programs and all apprenticeship and on-the-job 
training programs of state and local governmental agencies 
or in which state and local governmental agencies 
participate must be open to all persons, who must be 
accepted on the basis of merit and qualifications without 
regard to race, color, religion, creed, political ideas, 
sex, age, marital status, physical or mental handicap, or 
national origin. Such programs must be conducted to 
encourage the full development of the interests, aptitudes, 
skills, and capacities of all students and trainees, with 
special attention to the problems of culturally deprived, 
educationally handicapped, or economically disadvantaged 
persons. Expansion of training opportunities under these 
programs must be encouraged to involve larger numbers of 
participants from those segments of the labor force in which 
the need for upgrading levels of skill is greatest. 

49-3-204. Licensing. No state or local governmental 
agency may grant, deny, or revoke the license or charter of 
a person on the grounds of race, color, religion, creed, 
political ideas, sex, age, marital status, physical or 
mental handicap, or national origin. Each state or local 
governmental agency shall take such appropriate action in 
the exercise of its licensing or regulatory power as will 
assure equal treatment of all persons, eliminate j_ 
discrimination, and enforce compliance with the policy of 
this chapter. 

49-3-205. Governmental services. (1) All services of 
every state or local governmental agency must be performed 
without discrimination based upon race, color, religion, 
creed, political ideas, sex, age, marital status, physical 
or mental handicap, or national origin. 

(2) No state or local facility may be used in the 
furtherance of any discriminatory practice, nor may a state 
or local governmental agency become a party to an agreement, 
arrangement, or plan which has the effect of sanctioning 
discriminatory practices. 

(3) Each state or local governmental agency shall 
analyze all of its operations to ascertain possible 
instances of noncompliance with the policy of this chapter 
and shall initiate comprehensive programs to remedy any 
defect found to exist. 

49-3-206. Distribution of governmental funds. Race, 
color, religion, creed, political ideas, sex, age, marital 
status, physical or mental handicap, or national origin may 
not be considered as limiting factors with regard to 
applicants' qualifications for benefits authorized by law in 
state or locally administered programs involving the 
distribution of funds; nor may 'state agencies provide 
grants, loans, or other financial assistance to public 
agencies, private institutions, or organizations which 



230 



engage in discriminatory practices. 

49-3-207. Nondiscrimination provision in all public 
contracts . Every state or local contract or subcontract for 
construction of public buildings or for other public work or 
for goods or services shall contain a provision that all 
hiring must be on the basis of merit and qualifications and 
a provision that there may be no discrimination on the basis 
of race, color, religion, creed, political ideas, sex, age, 
marital status, physical or mental handicap, or national 
origin by the persons performing the contract. 

49-3-208. Public accommodations laws. No state or 
local governmental agency may permit any violation of the 
public accommodations provisions of 49-2-304. 

49-3-209. Retaliation prohibited. It is an unlawful 
discriminatory practice for a state or local governmental 
agency to discharge, expel, blacklist, or otherwise 
discriminate against an individual because he has opposed 
any practices forbidden under this chapter or because he has 
filed a complaint, testified, assisted, or participated in 
any manner in an investigation or proceeding under this 
chapter. 

49-3-301. Cooperation with commission for human 
rights . All state and local governmental agencies shall 
cooperate with the commission for human rights in the 
commission's enforcement and educational programs. They 
shall comply with the commission's requests for information 
concerning practices inconsistent with the state policy 
against discrimination and shall consider its 
recommendations for effectuating and implementing that 
policy. The commission shall continue to augment its 
enforcement and educational programs which seek to eliminate 
all discrimination. 

49-3-302. Annual reports to governor. All state 
governmental agencies which report to the governor shall 
include in their annual reports to the governor activities 
undertaken in the past year to effectuate this chapter. Such 
reports shall cover both internal activities and external 
relations with the public or with other state agencies and 
shall contain other information as specifically requested by 
the governor. 

49-3-303. Repealed. Sec. 14, Ch. 540, L. 1983. 

49-3-304. Filing complaints. A complaint under this 
chapter must be filed with the commission within 180 days 
after the alleged unlawful discriminatory practice occurred 
or was discovered. A complaint not filed within that time 
may not be considered by the commission. 

49-3-305. Form of complaint:. A complaint filed with 
the commission must be in the form of a written, verified 
complaint, stating the name and address of the state or 

- 231 - 



local governmental agency alleged to have engaged in the 
discriminatory practice and the particulars of the alleged 
discriminatory practice. 

49-3-306. Temporary relief by court order. ( 1 ) At any 
time after a complaint is filed with the commission under 
this chapter alleging an unlawful discriminatory practice, 
the commission may file a petition in the district court in 
the county in which the subject of the complaint occurred or 
in the county in which a respondent resides or transacts 
business, seeking appropriate temporary relief against this 
practice, including an order restraining the respondent from 
interfering in any manner with an order the commission may 
enter with respect to the complaint. 

(2) The court has the power to grant the temporary 
relief or restraining order it considers just and proper. 
However, no relief or order extending beyond 14 days may be 
granted except by consent of the respondent or upon a 
finding by the court that there is reasonable cause to 
believe that the respondent has engaged in discriminatory 
practices. 

49-3-307. Informal settlement. The commission staff 
shall promptly and impartially investigate the matters set 
out in a complaint filed with the commission. If the staff 
determines that the allegations are supported by substantial 
evidence, it shall immediately try to eliminate the 
discriminatory practice by informal conference, 
conciliation, and persuasion. 

49-3-308. Contested case hearing before commission. 
(1) If the informal efforts to eliminate the discrimination 
alleged in a complaint filed with the commission are 
unsuccessful, the staff shall inform the commission of the 
failure and the commission shall serve written notice, 
together with a copy of the complaint, requiring the state 
or local governmental agency charged in the complaint to 
answer the allegations of the complaint at a hearing before 
the commission. 

(2) The commission hearing must be held in the county 
where the unlawful conduct is alleged to have occurred 
unless the state or local governmental agency charged in the 
complaint or the commission requests a change of venue for 
good cause shown. The case in support of the complaint may 
be presented before the commission by the commission staff, 
the complainant, or an attorney representing the 
complainant. The hearing and any subsequent proceedings 
under this chapter must be held in accordance with the 
Montana Administrative Procedure Act, except as provided in 
49-3-311. 

(3) The commission may make provisions for defraying 
the expenses of an indigent party in a contested case 
hearing held pursuant to this chapter. 

(4) The prevailing party in a hearing under this 
section may bring an action in district court for attorney 
fees. The court in its discretion may award the prevailing 
party reasonable attorney fees. Such action must comply 



232 



with the Montana Rules of Civil Procedure. 

49-3-309. Procedure upon a finding of discrimination 
by commission. (1) If the commission finds that a state or 
local governmental agency against which a complaint was 
filed has engaged in the discriminatory practice alleged in 
the complaint, the commission shall order it to refrain from 
engaging in the discriminatory practice. The order may: 

(a) prescribe conditions for the governmental agency's 
future conduct relevant to the type of discriminatory 
practice found; 

(b) require any reasonable measure to correct the 
discriminatory practice and to rectify any harm, pecuniary 
or otherwise, to the person discriminated against; and 

(c) require a report on the manner of compliance. 

(2) The order may not require the payment of punitive 
damages . 

(3) If a commission order or conciliation agreement 
requires inspection by the commission staff for a period of 
time to determine if the respondent is complying with the 
order or agreement, the period of time may not exceed 3 
years . 

49-3-310. Procedure upon failure by commission to find 
discrimination. If the commission finds that a state or 
local governmental agency against which a complaint was 
filed has not engaged in the discriminatory practice alleged 
in the complaint, it shall issue and serve on the 
complainant an order dismissing the complaint. 

49-3-311. Injunction to enforce commission order. If 
the commission's order is not obeyed, the commission staff 
shall petition the district court in the county where the 
discriminatory practice occurred or in which the respondent 
resides or transacts business to enforce the commission's 
order by injunction. 

49-3-312. Filing a complaint in district court. ( 1 ) 
The commission staff shall, at the request of either party, 
issue a letter entitling the complainant to file a 
discrimination action in district court if: 

(a) the commission has not yet held a contested case 
hearing pursuant to 49-3-308 and has determined that it will 
be unable to hold a contested case hearing within 12 months 
of the date the complaint was filed under 49-3-304; and 

(b) 180 days have elapsed since the complaint was 
filed and the efforts of the commission staff to settle the 
complaint after informal investigation pursuant to 49-3-307 
are unsuccessful. 

(2) Within 90 days after receipt of a letter issued by 
the commission pursuant to subsection (1), the complainant 
shall petition the district court in the district in which 
the alleged violation occurred for appropriate relief. If 
the claimant fails to petition the district court within 90 
days after receipt of a letter issued by the commission, the 
complaint shall be barred. 

(3) If the district court finds, in an action under 



233 - 



this section, that a state or local governmental agency 
against whom or which a complaint was filed has engaged in 
the unlawful discriminatory practice alleged in the 
complaint, the court may provide the same relief as 
described in 49-3-309 for a commission order. In addition, 
the court may in its discretion allow the prevailing party 
reasonable attorney fees. 



<< 



234 



RIGHTS OF THE HANDICAPPED 

Part 1 -- Discrimination in Employment 

Section 

49-4-101. Discrimination prohibited. 

49-4-102. Penalty and civil remedy. 

Part 2 -- Rights of the Physically Disabled 

49-4-201. Repealed. 

49-4-202. Policy of the state. 



49-4-101. Discrimination prohibited. It is unlawful to 
discriminate, in hiring or employment, against a person 
because of the physical handicap of such person. There is no 
discrimination where the nature or extent of the handicap 
reasonably precludes the performance of the particular 
employment or where the particular employment may subject 
the handicapped or his fellow employees to physical harm. 

49-4-102. Penalty and civil remedy. A person who 
practices discrimination in violation of 49-4-101 commits a 
misdemeanor and is also liable in a district court action 
for civil damages and attorney' s fees by the person 
discriminated against. Should the person who allegedly 
practiced discrimination prevail in the civil action, he 
shall be entitled to recover reasonable attorney's fees from 
the person who alleged the discrimination. 

49-4-201. Repealed. Sec. 11, Ch. 239, L. 1983. 

49-4-202. Policy of the state. It is the policy of the 
state to encourage and enable the blind, the visually 
handicapped, the deaf, and the otherwise physically disabled 
to participate fully in the social and economic life of the 
state and to engage in remunerative employment. The blind, 
the visually handicapped, the deaf, and the otherwise 
physically disabled shall be employed in the state service, 
the service of the political subdivisions of the state, the 
public schools, and all other employment supported in whole 
or in part by public funds on the same terms and conditions 
as the able-bodied, unless it is shown that the particular 
disability prevents the performance of the work involved. 



- 235 - 







<• 



STANDARDS OF CONDUCT 

Part 3 -- Nepotism 

2-2-301. Nepotism defined. 

2-2-302. Appointment of relative to office of trust or 

emolument unlawful. 
2-2-303. Agreements to appoint relative to office unlawful. 
2-2-304. Penalty for violation of nepotism law. 



2-2-301. Nepotism defined. Nepotism is the bestowal of 
political patronage by reason of relationship rather than of 
merit. 

2-2-302. Appointment of relative to office of trust or 
emolument unlawful. (1) It shall be unlawful for any person 
or any member of any board, bureau, or commission or 
employee at the head of any department of this state or any 
political subdivision thereof to appoint to any position of 
trust or emolument any person related or connected by 
consanguinity within the fourth degree or by affinity within 
the second degree. 

(2) The provisions of this section and 2-2-303 shall 
not apply to sheriffs in the appointment of persons as cooks 
and/or attendants. 

2-2-303. Agreements to appoint relative to office 
unlawful . It shall further be unlawful for any person or any 
member of any board, bureau, or commission or employee of 
any department of this state or any political subdivision 
thereof to enter into any agreement or any promise with 
other persons or any members of any boards, bureaus, or 
commissions or employees of any department of this state or 
any of its political subdivisions thereof to appoint to any 
position of trust or emolument any person or persons related 
to them or connected with them by consanguinity within the 
fourth degree or by affinity within the second degree. 

2-2-304. Penalty for violation of nepotism law. Any 
public officer or employee or any member of any board, 
bureau, or commission of this state or any political 
subdivision thereof who shall, by virtue of his office, have 
the right to make or appoint any person to render services 
to this state or any subdivision thereof and who shall make 
or appoint to such services or enter into any agreement or 
promise with any other person or employee or any member of 
any board, bureau, or commission of any other department of 
this state or any of its subdivisions to appoint to any 
position any person or persons related to him or them or 
connected with him or them by consanguinity within the 
fourth degree or by affinity within the second degree shall 
thereby be guilty of a misdemeanor and upon conviction 
thereof shall be punished by a fine not less than $50 or 



236 



more than $1,000 or by imprisonment in the county jail for 
not less than 6 months or by both such fine and 
imprisonment. u 






( 



237 



Nepotism 



13-35-226. Unlawful acts of employers and employees. 
(1) It is unlawful for any employer, in paying his employees 
the salary or wages due them, to include with their pay the 
name of any candidate or any political mottoes, devices, or 
arguments containing threats or promises (express or 
implied) calculated or intended to influence the political 
opinions or actions of the employees. It is unlawful for an 
employer to exhibit in a place where his workers or 
employees may be working any handbill or placard containing 
any threat, promise, notice, or information that in case any 
particular ticket or political party, organization, or 
candidate is elected, work in his place or establishment 
will cease, in whole or in part, or will be continued or 
increased; his place or establishment will be closed; the 
salaries or wages of his workers or employees will be 
reduced or increased; or other threats or promises (express 
or implied) intended or calculated to influence the 
political opinions or actions of his workers or employees. 
This section shall apply to corporations, individuals, and 
public officers and employees. 

(2) No person may attempt to coerce, command, or 
require a public employee to support or oppose any political 
committee, the nomination or election of any person to 
public office, or the passage of a ballot issue. 

(3) No public employee may solicit support for or 
opposition to any political committee, the nomination or 
election of any person to public office, or the passage of a 
ballot issue while on the job or at his place of employment. 
However, nothing in this section is intended to restrict the 
right of a public employee to express his personal political 
views . 

(4) Any person who violates the provisions of this 
section shall be fined not to exceed $1,000, be imprisoned 
in the county jail for a term not to exceed 6 months, or 
both, for each separate offense. 



- 238 



( 



• 



the Fair Labor Standards Act 
of 1938, as Amended 




U.S. Department of Labor 
Employment Standards Administration 
Wage and Hour Division 

WH Publication 1318 
Revised February 1980 



239 



THE FAIR LABOR STANDARDS ACT OF 1938, AS AMENDED ' 

(29 U.S.C. 201, et seq.) 

1 This publication contains the original text of the Fair Labor Standards Act of 1938 as set forth in 52 Stat. 1060, 
revised to reflect the changes effected by the amendments listed in this footnote, which may be found in official 
text at the cited pages of the Statutes at Large. 

This publication contains 52 Stat. 1060, as amended by: 

(1) The Act of August 9, 1939 

(2) Section 404 of Reorganization Plan No. II of 1939 

(3) Sections 3(c)-3(f) of the Act of June 26, 1940 

(4) The Act of October 29, 1941 

(5) Reorganization Plan No. 2 of 1946 

(6) The Portal-to-Portal Act of 1947 

(7) The Act of July 20, 1949 

(8) The Fair Labor Standards Amendments of 1949 

(9) Reorganization Plan No. 6 of 1950 

(10) The Fair Labor Standards Amendments of 1955 

(11) The American Samoa Labor Standards Amendments of 1956 

(12) The Act of August 30, 1957 

(13) The Act of August 25, 1958 

(14) Section 22 of the Act of August 28,1958 

(15) The Act of July 12, 1960 

(16) The Fair Labor Standards Amendments of 1961 

(17) The Equal Pay Act of 1 963 

(18) The Fair Labor Standards Amendments of 1966 

(19) Section 8 of the Department of Transportation Act 

(20) The Act of September 11, 1967, amending Title 5 of the U.S.C. 

(21) Section 906 of the Education Amendments of 1972 

(22) The Fair Labor Standards Amendments of 1974 

(23) The Fair Labor Standards Amendments of 1977 

(24) Section 1225 of the Panama Canal Act of 1979 

The original text of the Fair Labor Standards Act of 1938, as revised by the amendments through 1960, is set in 
the "Century" typeface. Added or amended language as enacted by subsequent amendments is represented by 
several different typefaces as follows: 



53 


Stat. 


1266 


53 


Stat. 


1436 


54 


Stat. 


615 


55 


Stat. 


756 


60 


Stat. 


1095 


61 


Stat. 


84 


63 


Stat. 


446 


63 


Stat. 


910 


64 


Stat. 


1263 


69 


Stat. 


711 


70 


Stat. 


1118 


71 


Stat. 


514 


72 


Stat. 


844 


72 


Stat. 


948 


74 


Stat. 


417 


75 


Stat. 


65 


77 


Stat. 


56 


SO 


Stat. 


830 


80 


Stat. 


931 


81 


Stat. 


222 


86 


Stat. 


235 


SS 


Stat. 


55 


91 


Stat. 


1245 


93 


Stat. 


468 



• 



mendments 


Typeface Used 


Public Law 


Date Enacted 


Statute Citation 


Pre-1961 


Century 








1961 


Century Boldface 


87-30 


5/5/61 


75 Stat. 65 


1966 


Century Italics 


89-601 


9/23/66 


80 Stat. 830 


1972 


Century Boldface Italics 


92-318 


6/23/72 


86 Stat 235 at 375 


1974 


Century Boldface Italics 


93-259 


4/8/74 


88 Stat 55 


1977 


Helvetica Light 


95-151 


11/1/77 


91 Stat. 1245 



In cases where annual changes are to be made in provisions, as in the case of the gradual phase-out of 
exemptions, the changes are shown immediately following the provision to which they apply and are enclosed in 
brackets. 

Changes made by the 1974 amendments are set in Century Boldface Italics. Those made by the 1977 
amendments are set in Helvetica Light. 

The footnotes in this revision show where prior changes have been made and refer to the specific amendments 
relied upon so that a comparison may be made with the official text. 

This revised text has been prepared in the Office of the Solicitor, U.S. Department of Labor. 



» 



- 240 



FAIR LABOR STANDARDS ACT OF 1938, AS AMENDED 

(2'J U.S.C. 201. et seq.) 



To provide for the establishment of fair labor standards 
in employments in and affecting interstate commerce, 
and for other purposes. 

Be it enacted by the Senate and House of Representa- 
tives of the United States of America in Congress assem- 
bled, That this Act may be cited as the "Fair Labor 
Standards Act of 1938." 



Finding and Declaration of Policy 

Sec. 2. (a) The Congress hereby finds that the exis- 
fc^nce, in industries engaged in commerce or in the 
Production of goods for commerce, of labor conditions 
detrimental to the maintenance of the minimum stand- 
ard of living necessary for health, efficiency, and gener- 
al well-being of workers (1) causes commerce and the 
channels and instrumentalities of commerce to be used 
to spread and perpetuate such labor conditions among 
the workers of the several States; (2) burdens commerce 
and the free flow of goods in commerce; (3) constitutes 
an unfair method of competition in commerce; (4) leads 
to labor disputes burdening and obstructing commerce 
and the free flow of goods in commerce; and (5) inter- 
feres with the orderly and fair marketing of goods in 
commerce. The Congress further finds that the employ- 
ment of persons in domestic service in households af- 
fects commerce. 

(b) It is hereby declared to be the policy of this Act, 
through the exercise by Congress of its power to regu- 
late commerce among the several States and with for- 
eign nations, to correct and as rapidly as practicable to 
eliminate the conditions above referred to in such in- 
dustries without substantially curtailing employment 
or earning power. 2 



Definitions 

Sec. 3. As used in this Act- 



la) "Person" means an individual, partnership, asso- 
ciation, corporation, business trust, legal representa- 
tive, or any organized group of persons. 

(b) "Commerce" means trade, commerce, transporta- 
tion, transmission, or communication among the sever- 
al States or between any State and any place outside 
thereof. 3 

(c) "State" means any State of the United States or 
the District of Columbia or any Territory or possession 
of the United States. 

(d) "Employer" includes any person acting directly or 
indirectly in the interest of an employer in relation to 
an employee and includes a public agency,* but does not 
include any labor organization (other than when acting 
as an employer) or anyone acting in the capacity of 
officer or agent of such labor organization. 

(e)(1) Except as provided in paragraphs (2) and (3), 
the term "employee" means any individual employed by 
an employer. 

(2) In the case of an individual employed by a public 
agency, such term means — 

(4) any individual employed by the Government of 
the United States — 

(i) as a civilian in the military departments (as 
defined in section 102 of title 5, United States Code), 
(ii) in any executive agency (as defined in section 
105 of such title), 

(Hi) in any unit of the legislative or judicial 
branch of the Government which has positions in 
the competitive service, 

(iv) in a nonappropriated fund instrumentality 
under the jurisdiction of the Armed Forces, or 
(v) in the Library of Congress; 

(B) any individual employed by the United States 
Postal Service or the Postal Rate Commission; and 

(C) any individual employed by a State, political 
subdivision of a State, or an interstate governmental 
agency, other than such an individual — 



' As amended by ! 



: of the Fair Labor Standards Amendments of 1340 



' As amended by section 3ia> ot the Fair Labor Standards Amendments of 11)49. 

* Public agencies were specifically excluded from the Act's coverage until the Fair Labor 
Standards Amendments of 196B. when Congress extended coverage to "employees of a State 
or a political subdivision thereof, employed (1> in a hospital, institution, or school referred to 
in the last sentence of subsection Irl of this section, or (2) in the operation of a railway or 



efer 



ichi 



241 



Sec. 3 (e)(2)(C) Hi) 



(/) who is not subject to the civil service laws of 
the State, political subdivision, or agency which 
employs him; and 
(ii) who — 

(/) holds a public elective office of that State, 
political subdivision, or agency, 

(If) is selected by the holder of such an office to 
be a member of his personal staff, 

(///) is appointed by such an officeholder to 
serve on a policymaking level, or 

(IV) who is an immediate adviser to such an 
officeholder with respect to the constitutional or 
legal powers of his office. 
(3) For purposes of subsection (u), such term does not 
include any individual employed by an employer en- 
gaged in agriculture if such individual is the parent, 
spouse, child, or other member of the employer's imme- 
diate family. 5 

(f) "Agriculture" includes farming in all its branches 
and among other things includes the cultivation and 
tillage of the soil, dairying, the production, cultivation, 
growing, and harvesting of any agricultural or horticul- 
tural commodities (including commodities defined as 
agricultural commodities in section 15(g) of the Agricul- 
tural Marketing Act. as amended), the raising of live- 
stock, bees, fur-bearing animals, or poultry, and any 
practices (including any forestry or lumbering oper- 
ations) performed by a farmer or on a farm as an 
incident to or in conjunction with such farming oper- 
ations, including preparation for market, delivery to 
storage or to market or to carriers for transportation to 
market. 

(g) 'Employ" includes to suffer or permit to work. 
(h) "Industry" means a trade, business, industry, or 

other activity, or branch or group thereof, in which 
individuals are gainfully employed. 

(i) "Goods" means goods (including ships and marine 
equipment), wares, products, commodities, merchan- 
dise, or articles or subjects of commerce of any charac- 
ter, or any part or ingredient thereof, but does not 
include goods after their delivery into the actual physi- 
cal possession of the ultimate consumer thereof other 
than a producer, manufacturer, or processor thereof. 

(j) "Produced" means produced, manufactured, 
mined, handled, or in any other manner worked on in 



Siiinlii! language was added to (he Act by 
'>(,<; I'll. «.- amendments also excluded from the 
is employed b> an employer engaged in Agnelli 
hand harvest laborer and is paid an a piece rate 



■ Labor Standards Amendments of 
™ of employee "any indi* < 1 > i .. who 
JCP individual 'Ai is employed as a 
an operation v. hich has been, and is 



any State; and for the purposes of this Act an employee 
shall be deemed to have been engaged in the produc- 
tion of goods if such employee was employed in produc- 
ing, manufacturing, mining, handling, transporting, or 
in any other manner working on such goods, or in any 
closely related process or occupation directly essential 
to the production thereof, in any State. 6 

(k) "Sale" or "sell" includes any sale, exchange, con- 
tract to sell, consignment for sale, shipment for sale, or 
other disposition. 

(1) "Oppressive child labor" means a condition of 
employment under which (1) any employee under th£ 
age of sixteen years is employed by an employer (other 
than a parent or a person standing in place of a parent 
employing his own child or a child in his custody under 
the age of sixteen years in an occupation other than 
manufacturing or mining or an occupation found by 
the Secretary of Labor to be particularly hazardous for 
the employment of children between the ages of sixteen 
and eighteen years or detrimental to their health or 
well-being) in any occupation, 7 or (21 any employee/ 
between the ages of sixteen and eighteen years is em-i 
ployed by an employer in any occupation which the 
Secretary of Labor 8 shall find and by order declare to 
be particularly hazardous for the employment of chil- 
dren between such ag^s or detrimental to their health 
or well-being; but oppressive child labor shall not be 
deemed to exist by virtue of the employment in any 
occupation of any person with respect to whom the 
employer shall have on file an unexpired certificate 
issued and held pursuant to regulations of the Secre- 
tary of Labor 9 certifying that such person is above the 
oppressive child labor age. The Secretary of Labor 10 
shall provide by regulation or by order that the employ- 
ment of employees between the ages of fourteen and 
sixteen years in occupations other than manufacturing 
and mining shall not be deemed to constitute oppres- 
sive child labor if and to the extent that the Secretary 
of Labor " determines that such employment is con- 
fined to periods which will not interfere with their 
schooling and to conditions which will not interfere 
with their health and well-being. 

(m) "Wage" paid to any employee includes the rea- 
sonable cost, as determined by the Secretary of Labor, 12 
to the employer of furnishing such employee with 



customarily and gen< rails recognized :is having Keen, paid on a piece rate basis in the -eginn 
.it employment, (Bi commutes daily from his per ma rent re -a!. 'nee to the farm op which he is 
SO employed, and 't'i has been employed in agriculture les, IhiUl thirteen weeks during the 
preceding i ulendar year " These individuals are now included 



• As amend. d bs section Vhiof the Kair Labor Standards Amendments of !S4!> 
' As amended bv section .'tic! of the Fair (jjbor Standards Amendments of 1U49. 

- R.- irganization Pi.m No j .,f 1946 provided thai tnr functions of the Children's Bureau 
r.d of the Chief of the Children's Bureau under the Act as originally enacted be transferred 
. the Secretarv ui Labor 

• Ibid. 

'« Ibid 
•Ibid 
•• As amended bv Reorganization Tl an No « t»f 1950 set on 1 order section 4(a) 



242 



Sec. 3(m) 



'4 



board, lodging, or other facilities, if such board, lodging, 
or other facilities are customarily furnished by such 
employer to his employees: Provided, That the cost of 
board, lodging or other facilities shall not be included 
as a part of the wage paid to any employee to the 
extent it is excluded therefrom under the terms of a 
bona fide collective-bargaining agreement applicable 
to the particular employee: Provided further, That the 
Secretary is authorized to determine the fair value of 
such board, lodging, or other facilities for defined 
classes of employees and in defined areas, based on 
average cost to the employer or to groups of employ- 
ers similarly situated, or average value to groups of 
employees, or other appropriate measures of fair 
value. Such evaluations, where applicable and perti- 
nent, shall be used in lieu of actual measure of cost in 
determining the wage paid to any employee. In deter- 
mining the wage of a tipped employee, the amount paid 
such employee by his employer shall be deemed to be 
increased on account of tips by an amount determined 
1 by the employer, but not by an amount in excess of 50 
per centum of the applicable minimum wage rate, except 
that the amount of the increase on account of tips 
determined by the employer may not exceed the value of 
tips actually received by the employee. The previous 
sentence shall not apply with respect to any tipped 
employee unless (1) such employee has been informed by 
the employer of the provisions of this subsection, and (2) 
all tips received by such employee have been retained by 
the employee, except that this subsection shall not be 
construed to prohibit the pooling of tips among employ- 
ees who customarily and regularly receive tips. 

[Effective January 1, 1979, section 3(m) is amended by 
striking out "50 per centum" and inserting in lieu thereof 
"45 per centum". 

Effective January 1, 1980, section 3(m) is amended by 
striking out "45 per centum" and inserting in lieu thereof 
"40 per centum".] 

(n) "Resale" shall not include the sale of goods to be 
used in residential or farm building construction, 
repair, or maintenance: Provided, That the sale is rec- 
ognized as a bona fide retail sale in the industry. 13 

(o) Hours worked.— In determining for the purposes 
of sections 6 and 7 the hours for which an employee is 
employed, there shall be excluded any time spent in 
changing clothes or washing at the beginning or end of 
each workday which was excluded from measured 
working time during the week involved by the express 
terms of or by custom or practice under a bona fide 



collective-bargaining agreement applicable to the par- 
ticular employee. I4 

(p) "American vessel" includes any vessel which is 
documented or numbered under the laws of the United 
States. 

(q) "Secretary" means the Secretary of Labor. 
(r) "Enterprise" means the related activities per- 
formed (either through unified operation or common 
control) by any person or persons for a common 
business purpose, and includes all such activities 
whether performed in one or more establishments or 
by one or more corporate or other organizational 
units including departments of an establishment oper- 
ated through leasing arrangements, but shall not in- 
clude the related activities performed for such enter- 
prise by an independent contractor: Provided, That, 
within the meaning of this subsection, a retail or 
service establishment which is under independent 
ownership shall not be deemed to be so operated or 
controlled as to be other than a separate and distinct 
enterprise by reason of any arrangement, which in- 
cludes, but is not necessarily limited to, an agreement. 
(1) that it will sell, or sell only, certain goods specified 
by a particular manufacturer, distributor, or adver- 
tiser, or (2) that it will join with other such establish- 
ments in the same industry for the purpose of collec- 
tive purchasing, or (3) that it will have the exclusive 
right to sell the goods or use the brand name of a 
manufacturer, distributor, or advertiser within a spec- 
ified area, or by reason of the fact that it occupies 
premises leased to it by a person who also leases 
premises to other retail or service establishments. For 
purposes of this subsection, the activities performed by 
any person or persons — 

(1J in connection with the operation of a hospital, 
an institution primarily engaged in the care of the 
sick, the aged, the mentally ill or defective who reside 
on the premises of such institution, a school for men- 
tally or physically handicapped or gifted children, a 
preschool, 15 elementary or secondary school, or an 
institution of higher education (regardless of whether 
or not such hospital, institution, or school is public or 
private or operated for profit or not for profit), or 
(2) in connection with the operation of a street, 
suburban or interurban electric railway, or local trol- 
ley or motorbus carrier, if the rates and services of 
such railway or carrier are subject to regulation by a 
state or local agency (regardless of whether or not 



" Section 3(<li of the Fair Labor Standards Amendments of 1949 (The original language 
ction 3(n) was restored jy the Fair Labor Standards Amendments of 1966.) 
"A preschool" was added by the Education Amendments of 1972. 



- 243 - 



Sec. 3(r)(2) 



such railway or carrier is public or private or operated 
for profit or not for profit), or 

(3) in connection with the activities of a public 
agency, 

shall be deemed to be activities performed for a business 
purpose. 

(s) "Enterprise engaged in commerce or in the produc- 
tion of goods for commerce" means an enterprise which 
has employees engaged in commerce or in the production 
of goods for commerce, or employees handling, selling, or 
otherwise working on goods or materials that have been 
moved in or produced for commerce by any person, and 
which — 

(1) during the period February 1, 1967, through 
January 31, 1969, is an enterprise whose annual gross 
volume of sales made or business done is not less than 
$500,000 (exclusive of excise taxes at the retail level 
which are separately stated) 16 or is a gasoline service 
establishment whose annual gross volume of sales is 
not less than $250,000 (exclusive of excise taxes at the 
retail level which are separately stated), and begin- 
ning February 1, 1969, is an enterprise, other than an 
enterprise which is comprised exclusively of retail or 
service establishments and which is described in para- 
graph (2), whose annual gross volume of sales made or 
business done is not less than $250,000 (exclusive of 
excise taxes at the retail level which are separately 
stated); 

(2) is an enterprise which is comprised exclusively of 
one or more retail or service establishments, as defined 
in section 13(a)(2), and whose annual gross volume of 
sales made or business done is not less than $250,000 
(exclusive of excise taxes at the retail level which are 
separately stated), beginning July 1, 1978, whose 
annual gross volume of sales made or business done is 
not less than $275,000 (exclusive of excise taxes at the 
retail level which are separately stated), beginning July 
1, 1980, whose annual gross volume of sales made or 
business done is not less than $325,000 (exclusive of 
excise taxes at the retail level which are separately 
stated), and after December 31, 1981, whose annual 
gross volume of sales made or business done is not 



"Prior to the Fair Labor Standards Amendments of 1966, the dollar volume test for 
enterprise coverage (except in the case of an enterprise engaged in construction or recon- 
struction or one which was a gasoline service establishment) was $1,000,000 The dollar 
volume test was $350,000 for a construction or reconstruction enterprise, and $250,000 for a 
gasoline service establishment In addition, enterprises with une or more retail or service 
establishments, in order to be covered, had to purchase or receive "goods for resale that 
move or have moved across State lines inot in deliveries from the reselling establishment! 
which amount in total annual volume to $250,000 or more" Finally, under the 1961 
Amendments, enterprises (except those engaged in construction or reconstruction, or in the 
business of operating a street, suburban or interurban electric railway, or local trolley or 
motorbus carrier, or gasoline service establishments! were covered only with respect to those 
establishments ' which ha(d] employees engaged in commerce or in the production of goods 
for commerce." 



less than $362,500 (exclusive of excise taxes at the 
retail level which are separately stated); 17 

(3) is engaged in laundering, cleaning, or repairing 
clothing or fabrws; ' 8 

(4) is engaged in the business of construction or 
reconstruction, or both; 19 

(5) is engaged in the operation of a hospital, an 
institution primarily engaged in the care of the sick, 
the aged, the mentally ill or defective who reside on 
the premises of such institution, a school for mentally 
or physically handicapped or gifted children, a pre- 
school, 20 elementary or secondary school, or an institu- 
tion of higher education (regardless of whether or not 
such hospital, institution, or school is public or pri- 
vate or operated for profit or not for profit); 2i or 

(6) is an activity of a public agency. 

Any establishment which has as its only regular em- 
ployees the owner thereof or the parent, spouse, child, or 
other member of the immediate family of such owner 
shall not be considered to be an enterprise engaged in 
commerce or in the production of goods for commerce or§ 
a part of such an enterprise, and the sales of such 1 * 
establishment shall not be included for the purpose of 
determining the annual gross volume of sales of any 
enterprise for the purpose of this subsection. The em- 
ployees of an enterprise which is a public agency shall 
for purposes of this subsection be deemed to be employ- 
ees engaged in commerce, or in the production of goods 
for commerce, or employees handling, selling, or other- 
wise working on goods or materials that have been 
moved in or produced for commerce. Notwithstanding 
paragraph (2), an enterprise which is comprised of one or 
more retail or service establishments, which on June 30, 
1978, was subject to section 6(a)(1), and which because 
of a change in the dollar volume standard in such para- 
graph prescribed by the Fair Labor Standards Amend- 
ments of 1977 is not subject to such section, shall, if its 



"As added by section 9(a i ot the Fair Labor Standards Amendments of 1977, effective 
November 1, 1977 Prior to those amendments, paragraphs (3), (41. l5> and t6> of section 3ls> 
were numbered (2i. (3), (41 and (5), respectively 

" Prior to the Fair Labor Standards Amendments of 1966. the Act's minimum wage and 
overtime requirements did not generally apply to employees of laundry or dry cleaning 
establishments, even if such establishments were part of a covered enterprise, because of the 
language in section 13(a)(3) (since repealed) which exempted any employee employed by an 
establishment engaged in laundering, cleaning or repairing clothing or fabrics, more than 50 
per centum of which establishment's annual dollar volume of sales of such services is made 
within the State in which the establishment is located Provided, that 75 per centum of such 
establishment's annual dollar volume of sales of such services is made to customers who are 
not engaged in a mining, manufacturing, transportation, or communication business." 

"See footnote 16. 

"See footnote 15 

" Prior to the Fair Labor Standards Amendments of 1966, the Act's minimum wage and 
overtime requirements did not apply to most of the establishments listed in this subsection, 
because section 13(aX2Xiii). as it then read, exempted employees of a hospital, or an 
institution which is primarily engaged in the care of the sick, the aged, the mentally ill or 
defective, residing on the premises of such institution, or a school for physically or mentally 
handicapped or gifted children. Public schools were also exempt by virtue of the Act's 
definition of the word "employer," which, prior to 1966, excluded States and their political 
subdivisions. 



244 



Sec. 



annual gross volume of sales made or business done is 
not less than $250,000 (exclusive of excise taxes at the 
retail level which are separately stated), pay its employ- 
ees not less than the minimum wage in effect under such 
section on the day before such change takes effect and 
shall pay its employees in accordance with section 7. A 
violation of the preceding sentence shall be considered a 
violation of section 6 or 7, as the case may be. 

(t) u Tipped employee" means any employee engaged in 
an occupation in which he customarily and regularly 
receives more than $30 a month in tips. 22 

(u) " Man-day" means any day during which an em- 
ployee performs any agricultural labor for not less than 
one hour. 

(v) "Elementary school" means a day or residential 
school which provides elementary education, as deter- 
mined under State law. 

(w) "Secondary school" means a day or residential 
school which provides secondary education, as deter- 
mined under State law. 

(x) ''Public agency" means the Government of the 
^United States; the government of a State or political 
^subdivision thereof; any agency of the United States 
(including the United States Postal Service and Postal 
Rate Commission), a State, or a political subdivision of 
a State; or any interstate governmental agency. 

Administration 23 

Sec. 4. (a) There is hereby created in the Department 
of Labor a Wage and Hour Division which shall be 
under the direction of an Administrator, to be known 
as the Administrator of the Wage and Hour Division 
(in this Act referred to as the "Administrator"). The 
Administrator shall be appointed by the President, by 
and with the advice and consent of the Senate, and 
shall receive compensation at the rate of $36,000 24 a 
year. 

Excerpts From Reorganization Plan No. 6 of 1950, 

64 Stat. 1263 

"Except as otherwise provided [with respect to 
hearing examiners], there are hereby transferred to 
the Secretary of Labor all functions of all other 
officers of the Department of Labor and all functions 
of all agencies and employees of such Department 
* * *. The Secretary of Labor may from time to time 
make such provisions as he shall deem appropriate 
authorizing the performance by any other officer, or 



by any agency or employee, of the Department of 
Labor of any function of the Secretary, including any 
function transferred to the Secretary by the provi- 
sions of this reorganization plan." 

(b) The Secretary of Labor M may, subject to the civil 
service laws, appoint such employees as he deems nec- 
essary to carry out his functions and duties under this 
Act and shall fix their compensation in accordance 
with the Classification Act of 1949 26 as amended. The 
Secretary 27 may establish and utilize such regional, 
local, or other agencies, and utilize such voluntary and 
uncompensated services, as may from time to time be 
needed. Attorneys appointed under this section may 
appear for and represent the Secretary 28 in any litiga- 
tion, but all such litigation shall be subject to the 
direction and control of the Attorney General. In the 
appointment, selection, classification, and promotion of 
officers and employees of the Secretary, 29 no political 
test or qualification shall be permitted or given consid- 
eration, but all such appointments and promotions 
shall be given and made on the basis of merit and 
efficiency. 

(c) The principal office of the Secretary 30 shall be in 
the District of Columbia, but he or his duly authorized 
representative may exercise any or all of his powers in 
any place. 

(d)(1) The Secretary 31 shall submit annually in Janu- 
ary a report to the Congress covering his activities for 
the preceding year and including such information, 
data, and recommendations for further legislation in 
connection with the matters covered by this Act as he 
may find advisable. Such report shall contain an evalu- 
ation and appraisal by the Secretary of the minimum 
wages and overtime coverage established by this Act, 
together with his recommendations to the Congress. In 
making such evaluation and appraisal, the Secretary 
shall take into consideration any changes which may 
have occurred in the cost of living and in productivity 
and the level of wages in manufacturing, the ability of 
employers to absorb wage increases, and such other 
factors as he may deem pertinent. 32 Such report shall 
also include a summary of the special certificates issued 
under section 14(b). 

(2) The Secretary shall conduct studies on the justifi- 
cation or lack thereof for each of the special exemptions 



" As amended by section 404 of Reorganizatn 
Reorganization Plan No fi of 1950 (64 Stat 12631 
" As amended by sect ion 1 1 04 of the Act of Octob. 
" See footnote 25 



Plan No. II of 1939 (53 Stat 
23, 1949 (63 Stat. 972) 



n As amended by section 3(ai of the Fair Labor Standards Amendments of 1977, effect! 
January 1, 1978 Prior to January 1, 1978. the dollar amount was $20 

" Heading revised to reflect changes made by Reorganization Plan No 6 of 1950 
" Executive Order 11811 of October 7, 1974. 



' As amended by Reorganization Plan No fi of 1950 

'Ibid 

1 Section 2 of the Fair Labor Standards Amendment; 



245 



Sec. 4(dX2) 



set forth in section 13 of this Act, and the extent to 
which such exemptions apply to employees of establish- 
ments described in subsection (g) of such section and 
the economic effects of the application of such exemp- 
tions to such employees. The Secretary shall submit a 
report of his findings and recommendations to the Con- 
gress with respect to the studies conducted under this 
paragraph not later than January 1, 1976. 

(3) The Secretary shall conduct a continuing study on 
means to prevent curtailment of employment opportuni- 
ties for manpower groups which have had historically 
high incidences of unemployment (such as disadvan- 
taged minorities, youth, elderly, and such other groups 
as the Secretary may designate). The first report of the 
results of such study shall be transmitted to the Con- 
gress not later than one year after the effective date of 
the Fair Labor Standards Amendments of 1974. Subse- 
quent reports on such study shall be transmitted to the 
Congress at two-year intervals after such effective date. 
Each such report shall include suggestions respecting 
the Secretary's authority under section 14 of this Act. 

(e) Whenever the Secretary has reason to believe 
that in any industry under this Act the competition of 
foreign producers in United States markets or in mar- 
kets abroad, or both, has resulted, or is likely to 
result, in increased unemployment in the United 
States, he shall undertake an investigation to gain full 
information with respect to the matter. If he deter- 
mines such increased unemployment has in fact re- 
sulted, or is in fact likely to result, from such competi- 
tion, he shall make a full and complete report of his 
findings and determinations to the President and to 
the Congress: Provided, That he may also include in 
such report information on the increased employment 
resulting from additional exports in any industry 
under this Act as he may determine to be pertinent to 
such report. 

(f) The Secretary is authorized to enter into an agree- 
ment with the Librarian of Congress with respect to 
individuals employed in the Library of Congress to pro- 
vide for the carrying out of the Secretary's functions 
under this Act with respect to such individuals. Not- 
withstanding any other provision of this Act, or any 
other law, the Civil Service Commission is authorized to 
administer the provisions of this Act with respect to any 
individual employed by the United States (other than an 
individual employed in the Library of Congress, United 
States Postal Service, Postal Rate Commission, or the 
Tennessee Valley Authority). Nothing in this subsection 
shall be construed to affect the right of an employee to 



bring an action for unpaid minimum wages, or unpaid 
overtime compensation, and liquidated damages under 
section 16(b) of this Act. 

Special Industry Committees for Puerto Rico and the 
Virgin Islands 

Sec. 5. 33 (a) The Secretary of Labor 34 shall as soon as 
practicable appoint a special industry committee to 
recommend the minimum rate or rates of wages to be 
paid under section 6 to employees in Puerto Rico or the 
Virgin Islands, or in Puerto Rico and the Virgin Is- 
lands, engaged in commerce or in the production of 
goods for commerce or employed in any enterprise 
engaged in commerce or in the production of goods 
for commerce, or the Secretary 35 may appoint separate 
industry committees to recommend the minimum rate 
or rates of wages to be paid under section 6 to employ- 
ees therein engaged in commerce or in the production 
of goods for commerce or employed in any enterprise 
engaged in commerce or in the production of goods 
for commerce in particular industries. An industry 
committee appointed under this subsection shall be fi 
composed of residents of such island or islands where 
the employees with respect to whom such committee 
was appointed are employed and residents of the 
United States outside of Puerto Rico and the Virgin 
Islands. In determining the minimum rate or rates of 
wages to be paid, and in determining classifications, 
such industry committees 36 shall be subject to the 
provisions of section 8. 

(b) An industry committee shall be appointed by the 
Secretary 37 without any regard to any other provisions 
of law regarding the appointment and compensation of 
employees of the United States. It shall include a 
number of disinterested persons representing the 
public, one of whom the Secretary 3S shall designate as 
chairman, a like number of persons representing em- 
ployees in the industry, and a like number represent- 
ing employers in the industry. In the appointment of 
the persons representing each group, the Secretary 39 
shall give due regard to the geographical regions in 
which the industry is carried on. 

(c) Two-thirds of the members of an industry commit- 
tee shall constitute a quorum, and the decision of the 



"Section 5 as amended by section 3lc)of the Act of June 26. 1940 i54 Stat 6151; by section 
5 of the Fair Labor Standards Amendments of 1949, by section 4 of the Fair Labor Standards 
Amendments of 1961, by section . r > of the Fair Labor Standards Amendments of 1974; and as 
further amended as noted Paragraphs (bl. Id, and Idl lexcept for the substitution of 
"Secretary" for "Administrator"! read as in the original Act 

» See footnote 30 

" Ibid 

" As amended by section 5ia> of the Fair Labor Standards Amendments of 1955. 

" See footnote :)0 

" Ibid 

" Ibid 



246 - 



Sec. 5(c) 

committee shall require a vote of not less than a major- 
ity of all its members. Members of an industry commit- 
tee shall receive as compensation for their services a 
reasonable per diem, which the Secretary 40 shall by 
rules and regulations prescribe, for each day actually 
spent in the work of the committee, and shall in addi- 
tion be reimbursed for their necessary traveling and 
other expenses. The Secretary 41 shall furnish the com- 
mittee with adequate legal, stenographic, clerical, and 
other assistance, and shall by rules and regulations 
prescribe the procedure to be followed by the commit- 
tee. 

(d) The Secretary 42 shall submit to an industry com- 
mittee from time to time such data as he may have 
available on the matters referred to it, and shall cause 
to be brought before it in connection with such matters 
any witnesses whom he deems material. An industry 
committed may summon other witnesses or call upon 
the Secretary 43 to furnish additional information to aid 
it in its deliberations. 

(e) The provisions of this section, section 6(c), and 
section 8 shall not apply with respect to the minimum 
wage rate of any employee employed in Puerto Rico or 
the Virgin Islands (1) by the United States or by the 
government of the Virgin Islands, (2) by an establish- 
ment which is a hotel, motel, or restaurant, or (3) by any 
other retail or service establishment which employs 
such employee primarily in connection with the prepara- 
tion or offering of food or beverages for human con- 
sumption, either on the premises, or by such services as 
catering, banquet, box lunch, or curb <>, counter service, 
to the public, to employees, or to members or guests of 
members of clubs. The minimum wage rate of such an 
employee shall be determined under this Act in the same 
manner as the minimum wage rate for employees em- 
ployed in a State of the United States is determined 
under this Act. As used in the preceding sentence, the 
term "State" does not include a territory or possession 
of the United States. 



Minimum Wages 

Sec. 6. (a) Every employer shall pay to each of his 
employees who in any workweek is engaged in com- 
merce or in the production of goods for commerce, or is 
employed in an enterprise engaged in commerce or in the 
production of goods for commerce, wages at the follow- 
ing rates: 



(1) not less than $2.65 an hour during the year 
beginning January 1, 1978, not less than $2.90 an hour 
during the year beginning January 1, 1979, not less than 
$3.10 an hour during the year beginning January 1, 
1980, and not less than $3.35 an hour after Decem- 
ber 31, 1980, except as otherwise provided in this 
section; 

(2) 44 if such employee is a home worker in Puerto 
Rico or the Virgin Islands, not less than the mini- 
mum piece rate prescribed by regulation or order; or, 
if no such minimum piece rate is in effect, any piece 
rate adopted by such employer which shall yield, to 
the proportion or class of employees prescribed by 
regulation or order, not less than the applicable 
minimum hourly wage rate. Such minimum piece 
rates or employer piece rates shall be commensurate 
with, and shall be paid in lieu of, the minimum 
hourly wage rate applicable under the provisions of 
this section. The Secretary of Labor, 45 or his author- 
ized ^presentative, shall have power to make such 
regulations or orders as are necessary or appropriate 
to carry out any of the provisions of this paragraph, 
including the power without limiting the generality 
of the foregoing, to define any operation or occupa- 
tion which is performed by such home work employ- 
ees in Puerto Rico or the Virgin Islands; to establish 
minimum piece rates for any operation or occupation 
so defined; to prescribe the method and procedure for 
ascertaining and promulgating minimum piece rates; 
to prescribe standards for employer piece rates, in- 
cluding the proportion or class of employees who 
shall receive not less than the minimum hourly wage 
rate; to define the term "home worker"; and to pre- 
scribe the conditions under which employers, agents, 
contractors, and subcontractors shall cause goods to 
be produced by home workers; 46 

(3) if such employee is employed in American 
Samoa, in lieu of the rate or rates provided by this 
subsection or subsection (b), not less than the appli- 
cable rate established by the Secretary of Labor in 
accordance with recommendations of a special in- 
dustry committee or committees which he shall ap- 
point in the same manner and pursuant to the same 
provisions as are applicable to the special industry 
committees provided for Puerto Rico and the Virgin 
Islands by this Act as amended from time to time. 
Each such committee shall have the same powers 
and duties and shall apply the same standards with 



" Paragraph number changed from (5) to (2) by section 6(b) of the Fair Labor Standards 
Amendments of 1949. 
" See footnote 30 
" Section 3(f) of the Act of June 26, 1940 (54 Stat 616). 



247 - 



Sec. 6(aX3) 



respect to the application of the provisions of this Act 
to employees employed in American Samoa as per- 
tain to special industry committees established under 
section 5 with respect to employees employed in 
Puerto Rico or the Virgin Islands. The minimum 
wage rate thus established shall not exceed the rate 
prescribed in paragraph (1) of this subsection; " 

(Jf) if such employee is employed as a seaman on an 
American vessel, not less than the rate which will 
provide to the employee, for the period covered by the 
wage payment, wages equal to compensation at the 
hourly rate prescribed by paragraph (D of this subsec- 
tion for all hours during such period when he was 
actually on duty (including periods aboard ship when 
the employee was on watch or was, at the direction of 
a superior officer, performing work or standing by, 
but not including off-duty periods which are provided 
pursuant to the employment agreement}; or 

(5) if such employee is employed in agriculture, not 
less than the minimum wage rate in effect under para- 
graph (1 ) after December 31,1 977. 

(b) Every employer shall pay to each of his employees 
(other than an employee to whom subsection (aX5) ap- 
plies) who in any workweek is engaged in commerce or 
in the production of goods for commerce, or is employed 
in an enterprise engaged in commerce or in the produc- 
tion of goods for commerce, and who m such workweek 
is brought within the purview of this section by the 
amendments made to this Act by the Fair Labor Stand- 
ards Amendments of 1966, title IX of the Education 
Amendments of 1972, or the Fair Labor Standards 
Amendments of 1974, wages at the following rate: Effec- 
tive after December 31, 1977, not less than the minimum 
wage rate in effect under subsection (a)(1). 

(c) 48 (7) The rate or rates provided by subsection 
(a)(1) of this section shall be superseded in the case of 
any employee in Puerto Rico or the Virgin Islands 
only for so long as and insofar as such employee is 
covered by a wage order (A) heretofore or hereafter 
issued by the Secretary pursuant to the recommenda- 
tions of a special industry committee appointed pursu- 
ant to section 5, and (B) which prescribes a wage order 
rate which is less than the wage rate in effect under 
subsection (a)(1). 

(2)(A) Each wage order rate under a wage order de- 
scribed in paragraph (1) which on December 31, 1977, is 



•' Section 1 of the American Samoa Labor Standards Amendments of Utah, as amended by 
section ">ol the Fair Laboi Standards Amendments of 196] 

•■The Fair Labor Standards Amendments ol 1977 amended subsection fi<cl of the Act hv 
deleting former paragraphs -• i3i and 'I 1 thereat, bj adding a new paragraph 'J', and by 
redesignating former paragraphs t3i and itii as paragraphs (8) and (4>, respei tivelj 



at least $2 an hour shall, except as provided in paragraph 
(3), be increased — 

(i) effective January 1, 1978, by $0.25 an hour or by 
such greater amount as may be recommended by a 
special industry committee under section 8, and 

(ii) effective January 1, 1979, and January 1 of each 
succeeding year, by $0.30 an hour or by such greater 
amount as may be so recommended by such a special 
industry committee. 

(B) Each wage order rate under a wage order described 
in paragraph (1) which on December 31, 1977, is less 
than $2 an hour shall, except as provided in paragraph 
(3), be increased— 

(i) effective January 1, 1978, by $0.20 an hour or by 
such greater amount as may be recommended by a 
special industry committee under section 8. and 

(ii) effective January 1, 1979, and January 1 of each 
succeeding year— 

(I) until such wage order rate is not less than $2.30 
an hour, by $0.25 an hour or by such greater amount 
as may be so recommended by a special industry 
committee, and 

(II) if such wage order rate is not less than $2.30 
an hour, by $0.30 an hour or by such greater amount 
as may be so recommended by a special industry 
committee. 

(C) In the case of any employee in agriculture who is 
covered by a wage order issued by the Secretary pursu- 
ant to the recommendations of a special industry commit- 
tee appointed pursuant to section 5, to whom the rate or 
rates prescribed by subsection (a)(5) of this section would 
otherwise apply, and whose hourly wage is increased 
above the wage rate prescribed by such wage order by a 
subsidy (or income supplement) paid, in whole or in part, 
by the government of Puerto Rico, the applicable in- 
creases prescribed by subparagraph (A) or (B) shall be 
applied to the sum of the wage rate in effect under such 
wage order and the amount by which the employee's 
hourly wage is increased by the subsidy (or income sup- 
plement) above the wage rate in effect under such wage 
order. 

(3) //' the wage rate of an employee is to be increased 
under this subsection to a wage rate which equals or is 
greater than the wage rate under subsection (a)(1) 
which, but for paragraph < 1 ) of this subsection, would be 
applicable to such employee, this subsection shall be 
inapplicable to such employee and the applicable rate 
under subsection (a)(1) shall apply to such employee. 

(4) Each minimum wage rate prescribed by or under 
paragraph (2) shall be in effect unless such minimum 
wage rate has been superseded by a wage order (issued 



248 



Sec. 7(aX2) 



(2) No employer shall employ any of his employees 
who in any workweek is engaged in commerce or in the 
production of goods for commerce, or is employed in an 
enterprise engaged in commerce or in the production of 
goods for commerce, and who in such workweek is 
brought within the purview of this subsection by the 
amendments made to this Act by the Fair Labor Stand- 
ards Amendments of 1966 — 

(A) for a workweek longer than forty- four hours 
during the first year from the effective date of the 
Fair Labor Standards Amendments of 1966, 

(B) for a workweek longer than forty-two hours 
during the second, year from such date, or 

(C) for a workweek longer than forty hours after the 
expiration of the second year from such date, 

unless such employee receives compensation for his em- 
ployment in excess of the hours above specified at a rate 
not less than one and one-half times the regular rate at 
which he is employed. 

(b) No employer shall be deemed to have violated 
subsection (a) by employing any employee for a work- 
week in excess of that specified in such subsection 
without paying the compensation for overtime employ- 
ment prescribed therein if such employee is so em- 
ployed — 

*(1) in pursuance of an agreement, made as a 
result of collective bargaining by representatives of 
employees certified as bona fide by the National 
Labor Relations Board, which provides that no em- 
ployee shall be employed more than one thousand 
and forty hours during any period of twenty-six con- 
secutive weeks, or 

*(2) in pursuance of an agreement, made as a 
result of collective bargaining by representatives of 
employees certified as bona fide by the National 
Labor Relations Board which provides that during a 
specified period of fifty-two consecutive weeks the 
employee shall be employed not more than two thou- 
sand two hundred and forty hours and shall be guar- 
anteed not less than one thousand eight hundred and 
forty hours (or not less than forty-six weeks at the 
normal number of hours worked per week, but not 
less than thirty hours per week) and not more than 
two thousand and eighty hours of employment for 
which he shall receive compensation for all hours 
guaranteed or worked at rates not less than those 
applicable under the agreement to the work per- 
formed and for all hours in excess of the guaranty 
which are also in excess of the maximum workweek 
applicable to such employee under subsection (a) or 



two thousand and eighty in such period at rates not 
less than one and one-half times the regular rate at 
which he is employed; or 

(3)* 1 by an independently owned and controlled 
local enterprise (including an enterprise with more 
than one bulk storage establishment) engaged in the 
wholesale or bulk distribution of petroleum products 
if- 

(A) the annual gross volume of sales of such 
enterprise is less than $1,000,000 exclusive of excise 
taxes. 

(B) more than 75 per centum of such enterprise's 
annual dollar volume of sales is made icithin the 
State in which such enterprise is located, and 

(C) not more than 25 per centum of the annual 
dollar volume of sales of such enterprise is to cus- 
tomers who are engaged in the bulk distribution of 
such products for resale, 

and such employee receives compensation for employ- 
ment in excess of forty hours in any workweek at a 
rate not less than one and one-half times the mini- 
mum wage rate applicable to him under section 6. 
and if such employee receives compensation for em- 
ployment in excess ot twelve hours in any workday, or 
for employment in excess of fifty-six hours in any 
workweek, as the case may be, at a rate not less than 
one and one-half times the regular rate at which he is 
employed. 

(c) * * * (Repealed) 

{Note: Section 7(e) (relating to employers employing 
employees in an industry found by the Secretary to be of 
a seasonal nature) was repealed by Section 19 of the 
Fair Labor Standards Amendments of 1974, effective 
December 31, 1976.] 

(d) * * * (Repealed) 

[Note: Section 7(d) (relating to employers who do not 
qualify for the exemption in subsection (o who employ 
employees in an industry found by the Secretary "(A) to 
be characterized by marked annual recurring peaks of 
operation * * *, or (B) to be of a seasonal natun and 
engaged in the handling, packing, storing, preparing, 
first processing, or canning of any perishable agricul- 
tural or horticultural commodities in their raw or natu- 
ral state * * *") was repealed by Section 19 of thi Fair 
Labor Standards Amendments of 1974, effective Decem- 
ber 31, 1976. ] 



•' Section 212 ol the Fair Labor Standards Amendments of l'»W, substitu'ed '''•* orn\ is im, 
jr the complete exemption trom overtime contained in former section L«lwilOl ■ nseted in 
he ll'ril amendments Former clause <3> of section "(bi as enacted in the !'*3S Act was 
enlaced b) new section 7(c) as <<nacted by sec 1 ion 204<c' of the Fair Labor Standards 
imendmenLs of I9(i6 



249 



Sec. 6(c)(4) 



by the Secretary pursuant to the recommendation of a 
special industry committee convened under section 8) 
fixing a higher minimum wage rate. 

(d) 49 (1) No employer having employees subject to 
any provisions of this section shall discriminate, within 
any establishment in which such employees are em- 
ployed, between employees on the basis of sex by 
paying wages to employees in such establishment at a 
rate less than the rate at which he pays wages to 
employees cf the opposite sex in such establishment for 
equal work on jobs the performance of which requires 
equal skill, effort, and responsibility, and which are 
performed under similar working conditions, except 
where such payment is made pursuant to (i) a seniority 
system; (ii) a merit system; (iii) a system which meas- 
ures earnings by quantity or quality of production; or 
(iv) a differential based on any other factor other than 
sex: Provided, That an employer who is paying a wage 
rate differential in violation of this subsection shall 
not, in order to comply with the provisions of this 
subsection, reduce the wage rate of any employee. 

(2) No labor organization, or its agents, representing 
employees of an employer having employees subject to 
any provisions of this section shall cause or attempt to 
cause such an employer to discriminate against an 
employee in violation of paragraph (1) of this subsec- 
tion. 

(3) For purposes of administration and enforcement, 
any amounts owing to any employee which have been 
withheld in violation of this subsection shall be deemed 
to be unpaid minimum wages or unpaid overtime com- 
pensation under this Act. 

(4) As used in this subsection, the term "labor organi- 
zation'' means any organization of any kind, or any 
agency or employee representation committee or plan, 
in which employees participate and which exists for the 
purpose, in whole or in part, of dealing with employers 
concerning grievances, labor disputes, wages, rates of 
pay, hours of employment, or conditions of work. 

(e) (1) Notwithstanding the provisions of section 13 of 
this Act (except subsections (a)(1) and (f) thereof), every 
employer providing any contract services (other than 
linen supply services) under a contract with the United 
States or any subcontract thereunder shall pay to each 
of his employees whose rate of pay is not governed by the 
Service Contract Act of 1965 (41 U.S.C. 351-357) or to 
whom subsection (a)(1) of this section is not applicable, 



wages at rates not less than the rates provided for in 
subsection (b) of this section. 

(2) Notwithstanding the provisions of section 13 of 
this Act (except subsections (a)(1) and (f) thereof) and the 
provisions of the Service Contract Act of 1965, every 
employer in an establishment providing linen supply 
services to the United States under a contract with the 
United States or any subcontract thereunder shall pay 
to each of his employees in such establishment wages at 
rates not less than those prescribed in subsection (b), 
except that if more than 50 per centum of the gross 
annual dollar volume of sales made or business done by 
such establishment is derived from providing such linen 
supply services under any such contracts or subcon- 
tracts, such employer shall pay to each of his employees 
in such establishment wages at rates not less than those 
prescribed in subsection (a)(1) of this section. 

(f) A ny employee — 

(1) who in any workweek is employed in domestic 
service in a household shall be paid wages at a rate 
not less than the wage rate in effect under section 6(b) 
unless such employee's compensation for such service 
would not because of section 209(g) of the Social 
Security Act constitute wages for the purposes of title 
11 of such Act, or 

(2) who in any workweek — 

(A) is employed in domestic service in one or 
more households, and 

(B) is so employed for more than 8 hours in the 
aggregate, 

shall be paid wages for such employment in such 
workweek at a rate not less than the wage rate in 
effect under section 6(b). 

Maximum Hours 

Sec. 7. 50 * (a)(1) Except as otherwise provided in this 
section, no employer shall employ any of his employees 
who in any workweek is engaged in commerce or in the 
production of goods for commerce, or is employed in an 
enterprise engaged in commerce or in the production of 
goods for commerce, for a workweek longer than forty 
hours unless such employee receives compensation for 
his employment in excess of the hours above specified 
at a rate not less than one and one-half times the 
regular rate at which he is employed. 



"Subsection idl added by Equal Pay Act of 196.1. 77 Stat ">(> (effective on and after June 11, 
19C4 except for employees covered by collective bargaining agreements in certain cases! 



10 Section 7 as amended by section 7 of the Fair L.ahor Standard* Amendments of 1949. and 
as further amended as noted Single asterisk (*) indicates provision amended by the 1949 
Act: double asterisk ("I indicates provision added b> the 1949 Act Bold face type indicates 
amendment made by the Fair I.abor Standards Amendment* of 1961 Italic type indicates 
amendment made by the Fair 1-abor Standards Amendments of 1966 Bold face italK Upe 
indicates amendment made by the Fair Labor Standards Amendments of 1974 Helvetica 
light type indicates amendment made b> the Fair labor Standards Amendments of 1977 



250 



» 



Sec. 7(e) 

**(eJ As used in this section the "regular rate" at 
which an employee is employed shall be deemed to 
include all remuneration for employment paid to, or on 
behalf of, the employee, but shall not be deemed to 
include — 

**(1) sums paid as gifts; payments in the nature of 
gifts made at Christmas time or on other special 
occasions, as a reward for service, the amounts of 
which are not measured by or dependent on hours 
worked, production, or efficiency; 

**(2) payments made for occasional periods when 
no work is performed due to vacation, holiday, ill- 
ness, failure of the employer to provide sufficient 
work, or other similar cause; reasonable payments 
for traveling expenses, or other expenses, incurred by 
an employee in the furtherance of his employer's 
interests and properly reimbursable by the employer; 
and other similar payments to an employee which 
are not made as compensation for his hours of em- 
ployment; 

**(3) sums paid in recognition of services per- 
formed during a given period if either, (a) both the 
fact that payment is to be made and the amount of 
the payment are determined at the sole discretion of 
the employer at or near the end of the period and not 
pursuant to any prior contract, agreement, or prom- 
ise causing the employee to expect such payments 
regularly; or (b) the payments are made pursuant to 
a bona fide profit-sharing plan or trust or bona fide 
thrift or savings plan, meeting the requirements of 
the Secretary of Labor 52 set forth in appropriate 
regulations which he shall issue, having due regard 
among other relevant factors, to the extent to which 
the amounts paid to the employee are determined 
without regard to hours of work, production, or effi- 
ciency; or (c) the payments are talent fees (as such 
talent fees are defined and delimited by regulations 
of the Secretary 53 ) paid to performers, including an- 
nouncers, on radio and television programs; 

**(4) contributions irrevocably made by an employ- 
er to a trustee or third person pursuant to a bona fide 
plan for providing old-age, retirement, life, accident, 
or health insurance or similar benefits for employees; 

**(5) extra compensation provided by a premium 
rate paid for certain hours worked by the employee 
in any day or workweek because such hours are 
hours worked in excess of eight in a day or in excess 
of the maximum workweek applicable to such em- 
ployee under subsection (a) or in excess of the em- 



ployee's normal working hours or regular working 
hours, as the case may be; 

*(6) extra compensation provided by a premium 
rate paid for work by the employee on Saturdays, 
Sundays, holidays, or regular days of rest, or on the 
sixth or seventh day of the workweek, where such 
premium rate is not less than one and one-half times 
the rate established in good faith for like work per- 
formed in nonovertime hours on other days; 5,5 or 
*(7) extra compensation provided by a premium 
rate paid to the employee, in pursuance of an appli- 
cable employment contract or collective-bargaining 
agreement, for work outside of the hours established 
in good faith by the contract or agreement as the 
basic, normal, or regular workday (not exceeding 
eight hours) or workweek (not exceeding the maxi- 
mum workweek applicable to such employee under 
subsection (a)), where such premium rate is not less 
than one and one-half times the rate established in 
good faith by the contract or agreement for like work 
performed during such workday or workweek. 55 
**(f) No employer shall be deemed to have violated 
subsection (a) by employing any employee for a work- 
week in excess of the maximum workweek applicable 
to such employee under subsection (a) if such employ 
ee is employed pursuant to a bona fide individual 
contract, or pursuant to an agreement made as a result 
of collective bargaining by representatives of employ- 
ees, if the duties of such employee necessitate irregular 
hours of work, and the contract or agreement (It speci- 
fies a regular rate of pay of not less than the minimum 
hourly rate provided in subsection (a) or (b) of section 
6 (whichever may be applicable) and compensation at 
not less than one and one-half times such rate for all 
hours worked in excess of such maximum workweek, 
and (2) provides a weekly guaranty of pay for not more 
than sixty hours based on the rates so specified. 

**(g) No employer shall be deemed to have violated 
subsection (a) by employing any employee for a work- 
week in excess of the maximum workweek applicable 
to such employee under such subsection if, pursuant 
to an agreement or understanding arrived at between 
the employer and the employee before performance of 
the work, the amount paid to the employee for the 
number of hours worked by him in such workweek in 
excess of the maximum workweek applicable to such 
employee under such subsection— 



" Paragraphs <6i and (7l together with section "(hi con'iii'je in effect provisions of sectio 
of the Act of July 20. 1949 (63 Stat 446). which Act was repealed as of the effective date 
the Fair Labor Standards Amendment* of 1949 

" Ibid. 



251 - 



Sec. 7(g)(1) 

(1) in the case of an employee employed at piece 
rates, is computed at piece rates not less than one 
and one-half times the bona fide piece rates applica- 
ble to the same work when performed during non- 
overtime hours; or 

(2) in the case of an employee performing two or 
more kinds of work for which different hourly or 
piece rates have been established, is computed at 
rates not less than one and one-half times such bona 
fide rates applicable to the same work when per- 
formed during nonovertime hours; or 

(3) is computed at a rate not less than one and one- 
half times the rate established by such agreement or 
understanding as the basic rate to be used in comput- 
ing overtime compensation thereunder: Provided, 
That the rate so established shall be authorized by 
regulation by the Secretary of Labor 5S as being sub- 
stantially equivalent to the average hourly earnings 
of the employee, exclusive of overtime premiums, in 
the particular work over a representative period of 
time; 

and if (i) the employee's average hourly earnings for 
the workweek exclusive of payments described in para- 
graphs (1) through (7) of subsection (e) are not less than 
the minimum hourly rate required by applicable law, 
and (ii) extra overtime compensation is properly com- 
puted and paid on other forms of additional pay re- 
quired to be included in computing the regular rate. 

*(h) Extra compensation paid as described in para- 
graphs (5), (6), and (7) of subsection (e) shall be credit- 
able toward overtime compensation payable pursuant 
to this section. 57 

(i) No employer shall be deemed to have violated 
subsection (a) by employing any employee of a retail 
or service establishment for a workweek in excess of 
the applicable workweek specified therein, if (1) the 
regular rate of pay of such employee is in excess of 
one and one-half times the minimum hourly rate ap- 
plicable to him under section 6, and (2) more than half 
his compensation for a representative period (not less 
than one month) represents commissions on goods or 
services. In determining the proportion of compensation 
representing commissions, all earnings resulting from 
the application of a bona fide commission rate shall be 
deemed commissions on goods or services without regard 
to whether the computed commissions exceed the draw 
or guarantee. 



(j) No employer engaged in the operation of a hospital 
or an establishment which is an institution primarily 
engaged in the care of the sick, the aged, or the mentally 
ill or defective who reside on the premises shall be 
deemed to have violated subsection (a) if, pursuant to an 
agreement or understanding arrived at between the em- 
ployer and employee before performance of the work, a 
work period of fourteen consecutive days is accepted in 
lieu of the workweek of seven consecutive days for pur- 
poses of overtime computation and if, for his employ- 
ment in excess of eight hours in any workday and in 
excess of eighty hours in such fourteen -day period, the 
employee receives compensation at a rate not less than 
one and one-half times the regular rate at which he is 
employed. 

(k) 3S So public agency shall be deemed to have violat- 
ed subsection (a) with respect to the employment of any 
employee in fire protection activities or any employee in 
law enforcement activities (including security personnel 
in correctional institutions) if— 

(1) in a work period of 28 consecutive days the 
employee receives for tours of duty which in the 
aggregate exceed the lesser of (A) 216 hours, or (B) 
the average number of hours (as determined by the 
Secretary pursuant to Section 6(c)(3) of the Fair 
Labor Standards Amendments of 1974) in tours of 
duty of employees engaged in such activities in work- 
periods of 28 consecutive days in calendar year 1975; 
or 

(2) in the case of such an employee to whom a work 
period of at least 7 but less than 28 days applies, in 
his work period the employee receives for tours of 
duty which in the aggregate exceed a number of hours 
which bears the same ratio to the number of consecu- 
tive days in his work period as 216 hours (or if lower, 
the number of hours referred to in clause (B) of 
paragraph (1)) bears to 28 days, 

compensation at a rate not less than one and one-half 
times the regular rate at which he is employed. 

(I) No employer shall employ any employee in domes- 
tic service in one or more households for a workweek 
longer than forty hours unless such employee receives 
compensation for such employment in accordance with 
subsection (a). 



" See footnote 
" Amendmi-nt 
Iso footnote 54 



provided by section 7 of the Fair l-abor Standards Amendments of 1949 See 



" Effective January 1. 1975. the complete overtime exemption provided by section 
6(cX2KA> of the Fair Labor Standards Amendments of 1974 was replaced by the more limited 
exemption in section 7( k ' The present overtime standard— the lesser of 216 hours or the 
average number of hours 'as determined by the Secretary of Labor' in tours of duty of 
employees in work periods of 28 consecutive days— became effective on January 1. 1978. 
During calendar year 1977 the overtime standard was 216 hours, during 1976 the overtime 
standard was 232 hours, and during 1975 the overtime standard was 240 hours The complete 
overtime exemption remains applicable only to public agencies employing less than 5 
employees in fire protection or law enforcement activities See section 13(bX20), infra. 



» 



252 - 



Sec. 7(m) 

(m) For a period or periods of not more than fourteen 
workweeks in the aggregate in ang calendar gear, ang 
emploger mag emplog ang emplogee for a workweek in 
excess of that specified in subsection (a) without paging 
the compensation for overtime emplogment prescribed 
in such subsection, if such emplogee— 

(1) is emploged bg such emploger — 

(A) to provide services (including stripping and 
grading) necessarg and incidental to the sale at 
auction of green leaf tobacco of tgpe 11, 12, 13, 14, 
21, 22, 23, 24, 31, 35, 36, or 37 (as such tgpes are 
defined bg the Secretarg of Agriculture), or in auc- 
tion sale, buging, handling, stemming, redrging, 
packing, and storing of such tobacco, 

(B) in auction sale, buging, handling, sorting, 
grading, packing, or storing green leaf tobacco of 
tgpe 32 (as such tgpe is defined bg the Secretarg of 
Agriculture), or 

(C) in auction sale, buging, handling, stripping, 
sorting, grading, sizing, packing, or stemming prior 
to packing, of perishable cigar leaf tobacco of tgpe 
41, 42, 43, 44, 45, 46, 51, 52, 53, 54, 55, 61, or 62 (as 
such tgpes are defined bg the Secretarg of Agricul- 
ture); and 

(2) receives for — 

(A) such emplogment bg such emploger which is 
in excess of ten hours in ang workdag, and 

(B) such emplogment bg such emploger which is 
in excess of fortg-eight hours in ang workweek, 
compensation at a rate not less than one and one- 
half times the regular rate at which he is emploged 

An emploger who receives an exemption under this 
subsection shall not be eligible for ang other exemption 
under this section. 

(n) In the case of an emplogee of an emploger engaged 
in the business of operating a street, suburban or inter- 
urban electric railwag, or local trolleg or motorbus car- 
rier (regardless of whether or not such railwag or carri- 
er is public or private or operated for profit or not for 
profit), in determining the hours of emplogment of such 
an emplogee to which the rate prescribed bg subsection 
(a) applies there shall be excluded the hours such em- 
plogee was emploged in charter activities bg such em- 
ploger if (1) the emplogee 's emplogment in such activi- 
ties was pursuant to an agreement or understanding 
with his emploger arrived at before engaging in such 
emplogment, and (2) if emplogment in such activities is 
not part of such employee's regular emplogment 



Wage Orders in Puerto Rico and the Virgin Islands 

Sec. 8. s » (a) The policy of this Act with respect to 
industries or enterprises in Puerto Rico and the Virgin 
Islands engaged in commerce or in the production of 
goods for commerce is to reach as rapidly as is economi- 
cally feasible without substantially curtailing employ- 
ment the objective of the minimum wage rate which 
would applg in each such industry under paragraph (1) 
or (5) of section 6(a) but for section 6(c). The Secretary 
shall, from time to time, convene an industry committee or 
committees, appointed pursuant to section 5, and any 
such industry committee— 

(1) shall, from time to time, recommend the minimum 
wage rates to be paid by employers who are in Puerto 
Rico, in the Virgin Islands, or in both places and who 
but for section 6(c) would be subject to the minimum 
wage requirements of section 6(a)(1), and 

(2) may, from time to time, recommend increases in 
the incremental increases authorized by section 6(c)(2). 

The Secretary of Labor M shall from time to time con- 
vene an industry committee or committees, appointed 
pursuant to section 5, and any such industry committee 
shall from time to time recommend the minimum rate 
or rates of wages to be paid under section 6 by employ- 
ers in Puerto Rico or the Virgin Islands, or in Puerto 
Rico and the Virgin Islands, engaged in commerce or in 
the production of goods for commerce or in any enter- 
prise engaged in commerce or in the production of 
goods for commerce in any such industry or classifica- 
tion therein. Minimum rates of wages established in 
accordance with this section which are not equal to the 
otherwise applicable minimum wage rate in effect under 
paragraph (1) or (5) or section 6(a) shall be reviewed by 
such a Committee once during each biennial period, 
beginning with the biennial period commencing July 1, 
1958, except that the Secretary, 61 in his discretion, may 
order an additional review during any such biennial 
period. 62 

(b) Upon the convening of any such industry commit- 
tee, the Secretary 63 shall refer to it the question of the 
minimum wage rate or rates to be fixed for such indus- 
try. The industry committee shall investigate condi- 



M Section 8 as amended by section 8 of the Fair Labor Standards Amendments of 1949; by 
section 7 of the Fair Labor Standards Amendments of 1961; by section 5(d) of the Fair Labor 
Standards Amendments of 1974; by section 2(dX3) of the Fair Labor Standards Amendments 
of 1977, and as further amended as noted Paragraphs (bl, (c), (d), (el, and (f) as amended by 
the 1949 Act read substantially the same as paragraphs (b) and (ci (except for the parentheti- 
cal reference to the minimum wage rate provided in section 6 (a), (d), (f), and (g) in the 
original Act). 
~ See footnote 30 
Act of August 25, 1958 (72 Stat. 8441 
' As amended I 
' See footnote I 



253 - 



Sec. 8(b) 



tions in the industry and the committee, or any author- 
ized subcommittee thereof, shall after due notice hear 
such witnesses and receive such evidence as may be 
necessary or appropriate to enable the committee to 
perform its duties and functions under this Act. 64 The 
committee shall recommend to the Secretary 65 the 
highest minimum wage rates for the industry which it 
determines, having due regard to economic and com- 
petitive conditions, will not substantially curtail em- 
ployment in the industry, and will not give any indus- 
try in Puerto Rico or in the Virgin Islands a competi- 
tive advantage over any industry in the United States 
outside of Puerto Rico and the Virgin Islands; except 
that the committee shall recommend to the Secretary the 
minimum wage rate prescribed in section 6(a) or 6(b), 
which would be applicable but for section 6(c), unless 
there is substantial documentary evidence, including 
pertinent unabridged profit and loss statements and 
balance sheets for a representative period of years or in 
the case of employees of public agencies other appropri- 
ate information, in the record which establishes that the 
industry, or a predominant portion thereof, is unable to 
pay that wage. 

(c) The industry committee shall recommend such 
reasonable classifications within any industry as it 
determines to be necessary for the purpose of fixing for 
each classification within such industry the highest 
minimum wage rate (not in excess of that in effect 
under paragraph (1) or (5) of section 6(a) (as the case 
may be)) which (1) will not substantially curtail em- 
ployment in such classification and (2) will not give a 
competitive advantage to any group in the industry, 
and shall recommend for each classification in the 
industry the highest minimum wage rate which the 
committee determines will not substantially curtail 
employment in such classification. In determining 
whether such classifications should be made in any 
industry, in making such classifications, and in deter- 
mining the minimum wage rates for such classifica- 
tions, no classifications shall be made, and no mini- 
mum wage rate shall be fixed, solely on a regional 
basis, but the industry committee 6S shall consider 
among other relevant factors the following: 

(1) competitive conditions as affected by transpor- 
tation, living, and production costs; 

(2) the wages established for work of like or compa- 
rable character by collective labor agreements nego- 



tiated between employers and employees by repre- 
sentatives of their own choosing; and 

(3) the wages paid for work of like or comparable 
character by employers who voluntarily maintain 
minimum wage standards in the industry. 
No classification shall be made under this section on 
the basis of age or sex. 

(d) The industry committee shall file with the Secre- 
tary a report containing its findings of fact and recom- 
mendations with respect to the matters referred to it. 
Upon the filing of such report, the Secretary shall 
publish such recommendations in the Federal Register 
and shall provide by order that the recommendations 
contained in such report shall take effect upon the 
expiration of 15 days after the date of such publica- 
tion. 67 

(e) Orders issued under this section shall define the 
industries and classifications therein to which they are 
to apply, and shall contain such terms and conditions 
as the Secretary 6S finds necessary to carry out the 
purposes of such orders, to prevent the circumvention 
or evasion thereof, and to safeguard the minimum 
wage rates established therein. 69 

(f) Due notice of any hearing provided for in this 
section shall be given by publication in the Federal 
Register and by such other means as the Secretary 70 
deems reasonably calculated to give general notice to 
interested persons. 

Attendance of Witnesses 

Sec. 9. For the purpose of any hearing or investiga- 
tion provided for in this Act, the provisions of sections 9 
and 10 (relating to the attendance of witnesses and the 
production of books, papers and documents) of the Fed- 
eral Trade Commission Act of September 16, 1914, as 
amended (U.S.C., 1934 edition, title 15, sees. 49 and 50), 
are hereby made applicable to the jurisdiction, powers, 
and duties of the Secretary of Labor 71 and the industry 
committees. 

Court Review 

Sec. 10. 72 (a) Any person aggrieved by an order of the 
Secretary issued under section 8 may obtain a review of 
such order in the United States Court of Appeals for 
any circuit wherein such person resides or has his 



•* As amended by section 5(b) of the Fair Labor Standards Amendments of 1955. 
" See footnote 30. 

•* As amended by sections 5(c) and 5(d) of the Pair Labor Standards Amendments of 1955 
(eliminating review by the Secretary of Labor of the recommendations of the industry 



" Ibid 

•* See footnote 30. 

■ As amended by section 5(e) of the Fair Labor Standards Amendments of 1955. 
™ See footnote 30 
" Ibid. 

'" Section 10(a) as amended by section 5(f) of the Fair Labor Standards Amendments of 
1955. and as further amended as noted 



< 



- 254 



Sec. 10(a) 



principal place of business, or in the United States 
Court of Appeals for the District of Columbia, by filing 
in such court, within 60 days after the entry of such 
order a written petition praying that the order of the 
Secretary be modified or set aside in whole or in part. A 
copy of such petition shall forthwith be transmitted by 
the clerk of the court to the Secretary, and thereupon 
the Secretary shall file in the court the record of the 
industry committee upon which the order complained 
of was entered, as provided in section 2112 of title 28, 
United States Code. Upon the filing of such petition 
such court shall have exclusive jurisdiction to affirm, 
modify (including provision for the payment of an ap- 
propriate minimum wage rate), or set aside such order 
in whole or in part, so far as it is applicable to the 
petitioner. 73 The review by the court shall be limited to 
questions of law, and findings of fact by such industry 
committee when supported by substantial evidence 
shall be conclusive. No objection to the order of the 
Secretary shall be considered by the court unless such 
objection shall have been urged before such industry 
committee or unless there were reasonable grounds for 
failure so to do. If application is made to the court for 
leave to adduce additional evidence, and it is shown to 
the satisfaction of the court that such additional evi- 
dence may materially affect the result of the proceed- 
ing and that there were reasonable grounds for failure 
to adduce such evidence in the proceedings before such 
industry committee, the court may order such addition- 
al evidence to be taken before an industry committee 
and to be adduced upon the hearing in such manner 
and upon such terms and conditions as to the court 
may seem proper. Such industry committee may 
modify the initial findings by reason of the additional 
evidence so taken, and shall file with the court such 
modified or new findings which if supported by sub- 
stantial evidence shall be conclusive, and shall also file 
its recommendation, if any, for the modification or 
setting aside of the original order. The judgment and 
decree of the court shall be final, subject to review by 
the Supreme Court of the United States upon certiorari 
or certification as provided in section 1254 of title 28 of 
the United States Code. 

(b) The commencement of proceedings under subsec- 
tion (a) shall not, unless specifically ordered by the 
court, operate as a stay of the Secretary's 74 order. The 
court shall not grant any stay of the order unless the 
person complaining of such order shall file in court an 
undertaking with a surety or sureties satisfactory to 

" Section 22 of the Act of August 28, 1958 (72 Stat. 948). 
" See footnote 30 



the court for the payment to the employees affected by 
the order, in the event such order is affirmed, of the 
amount by which the compensation such employees are 
entitled to receive under the order exceeds the compen- 
sation they actually receive while such stay is in effect. 

Investigations, Inspections, Records, and Homework 
Regulations 

Sec. 11. (a) The Secretary of Labor 75 or his designat- 
ed representatives may investigate and gather data 
regarding the wages, hours, and other conditions and 
practices of employment in any industry subject to this 
Act, and may enter and inspect such places and such 
records (and make such transcriptions thereof), ques- 
tion such employees, and investigate such facts, condi- 
tions, practices, or matters as he may deem necessary 
or appropriate to determine whether any person has 
violated any provision of this Act, or which may aid in 
the enforcement of the provisions of this Act. Except as 
provided in section 12 and in subsection (b) of this 
section, the Secretary 76 shall utilize the bureaus and 
divisions of the Department of Labor for all the investi- 
gations and inspections necessary under this section. 
Except as provided in section 12, the Secretary 77 shall 
bring all actions under section 17 to restrain violations 
of this Act. 

(b) With the consent and cooperation of State agen- 
cies charged with the administration of State labor 
laws, the Secretary of Labor 78 may, for the purpose of 
carrying out his functions and duties under this Act, 
utilize the services of State and local agencies and their 
employees and, notwithstanding any other provision of 
law, may reimburse such State and local agencies and 
their employees for services rendered for such pur- 



(c) Every employer subject to any provision of this 
Act or of any order issued under this Act shall make, 
keep, and preserve such records of the persons em- 
ployed by him and of the wages, hours, and other 
conditions and practices of employment maintained by 
him, and shall preserve such records for such periods of 
time, and shall make such reports therefrom to the 
Secretary 79 as he shall prescribe by regulation or order 
as necessary or appropriate for the enforcement of the 
provisions of this Act or the regulations or orders 
thereunder. 



" ibid. 
'• ibid. 

" Ibid. 

" See footnotes 8 and 30. 

'• See footnote 30 



255 



Sec. 11(d) 

(d) The Secretary is authorized to make such regula- 
tions and orders regulating, restricting, or prohibiting 
industrial homework as are necessary or appropriate to 
prevent the circumvention or evasion of and to safe- 
guard the minimum wage rate prescribed in this Act, 
and all existing regulations or orders of the Adminis- 
trator relating to industrial homework are hereby con- 
tinued in full force and effect. 80 

Child Labor Provisions 

Sec. 12. (a) No producer, manufacturer, or dealer 
shall ship or deliver for shipment in commerce any 
goods produced in an establishment situated in the 
United States in or about which within thirty days 
prior to the removal of such goods therefrom any op- 
pressive child labor has been employed: Provided, That 
any such shipment or delivery for shipment of such 
goods by a purchaser who acquired them in good faith 
in reliance on written assurance from the producer, 
manufacturer, or dealer that the goods were produced 
in compliance with the requirements of this section, 
and who acquired such goods for value without notice 
of any such violation, shall not be deemed prohibited by 
this subsection: And provided further, That a prosecu- 
tion and conviction of a defendant for the shipment or 
delivery for shipment of any goods under the conditions 
herein prohibited shall be a bar to any further prosecu- 
tion against the same defendant for shipments or deliv- 
eries for shipment of any such goods before the begin- 
ning of said prosecution. 81 

(b) The Secretary of Labor, 82 or any of his authorized 
representatives, shall make all investigations and in- 
spections under section 11(a) with respect to the em- 
ployment of minors, and, subject to the direction and 
control of the Attorney General, shall bring all actions 
under section 17 to enjoin any act or practice which is 
unlawful by reason of the existence of oppressive child 
labor, and shall administer all other provisions of this 
Act relating to oppressive child labor. 

(c) No employer shall employ any oppressive child 
labor in commerce or in the production of goods for 
commerce or in any enterprise engaged in commerce 
or in the production of goods for commerce. 83 

(d) In order to carry out the objectives of this section, 
the Secretary may by reyulation require employers to 
obtain from any employee proof of aye. 



• amended by Reorganu 



" Section 9 of the Fair Labor Standards Amendments of 1949. 
tion Plan No 6 of 1950. 

•' As amended by section 10(a) of the Fair Labor Standards Amendments of 1949 

" See footnotes H and 30 

•' Section 10(b) of the Fair Labor Standards Amendments of 1949 as amended by I 
of the Fair Labor Standards Amendments of 1961 



Exemptions 

Sec. 13. 84 (a) The provisions of sections 6 (except 
section 6(d) in the case of parayraph (1) of this subsec- 
tion) 8S and 7 shall not apply with respect to — 

(1) any employee employed in a bona fide execu- 
tive, administrative, or professional capacity (in- 
cluding any employee employed in the capacity of 
academic administrative personnel or teacher in ele- 
mentary or secondary schools), or in the capacity of 
outside salesman (as such terms are defined and 
delimited from time to time by regulations of the 
Secretary, subject to the provisions of the Adminis- 
trative Procedure Act, except that an employee of a 
retail or service establishment shall not be excluded 
from the definition of employee employed in a bona 
fide executive or administrative capacity because of 
the number of hours in his workweek which he 
devotes to activities not directly or closely related to 
the performance of executive or administrative ac- 
tivities, if less than 40 per centum of his hours 
worked in the workweek are devoted to such activi- 
ties); or 

(2) any employee employed by any retail or service 
establishment (except an establishment or employee 
engaged in laundering, cleaning, or repairing clothing 
or fabrics or an establishment engaged in the oper- 
ation of a hospital, institution, or school described in 
section 3(s)(5)A if more than 50 per centum of such 
establishment's annual dollar volume of sales of 
goods or services is made within the State in which 
the establishment is located, and such establishment 
is not in an enterprise described in section 3(s). M A 
"retail or service establishment" shall mean an es- 
tablishment 75 per centum of whose annual dollar 
volume of sales of goods or services (or of both) is 
not for resale and is recognized as retail sales or 
services in the particular industry; 87 or 

(3) any employee employed by an establishment 
which is an amusement or recreational establishment, 
organized camp, or religious or non-profit educational 
conference center, 88 if (A) it does not operate for more 



•• Section 13 as amended by section 11 of the Fair Labor Standards Amendments of 1949; 
by Reorganization Plan No 6 of 1950; and as further amended by the Fair Labor Standards 
Amendments of 1961, 1966. 1974. and 1977. 

« As amended by the Education Amendments of 1972, 86 Stat 235 at 375. effective July 1, 
1972. 

"Effective January 1, 1977, the Fair Labor Standards Amendments of 1974 deleted a 
clause at the end of this sentence which had read "or such establishment has an annual 
dollar volume of sales which is less than $200,000 (exclusive of excise taxes at the retail level 
which are separately stated) " The $200,000 test was in effect during calendar year 1976. A 
$225,000 test was in effect during calendar year 1975 Prior to January 1. 1975 a $250,000 
test was in effect 

" See section 13(g), which makes additional limitations on the applicability of the section 
13(a)(2) and section 13(a)(6) exemptions to certain conglomerates. 

"Added by section 11 of the Fair Labor Standards Amendments of 1977, effective 
November 1, 1977. 



( 



256 - 



Sec. 13(aX3) 



than seven months in any calendar year, or (B) during 
the preceding calendar year, its average receipts for 
any six months of such year were not more than 33 x h 
per centum of its average receipts for the other six 
months of such year, except that the exemption from 
sections 6 and 7 provided by this paragraph does not 
apply with respect to any employee of a private entity 
engaged in providing services or facilities (other than, in 
the case of the exemption from section 6, a private 
entity engaged in providing services and facilities direct- 
ly related to skiing) in a national park or a national 
forest, or on land in the National Wildlife Refuge 
System, under a contract with the Secretary of the 
Interior or the Secretary of Agriculture; 89 or 

(4) any employee employed by an establishment 
which qualifies as an exempt retail establishment 
under clause (2) of this subsection and is recognized 
as a retail establishment in the particular industry 
notwithstanding that such establishment makes or 
processes at the retail establishment the goods that 
it sells: Provided, That more than 85 per centum of 
such establishment's annual dollar volume of sales 
of goods so made or processed is made within the 
State in which the establishment is located; or 

(5) any employee employed in the catching, 
taking, propagating, harvesting, cultivating, or 
farming of any kind of fish, shellfish, Crustacea, 
sponges, seaweeds, or other aquatic forms of animal 
and vegetable life, or in the first processing, canning 
or packing such marine products at sea as an inci- 
dent to, or in conjunction with, such fishing oper- 
ations, including the going to and returning from 
work and loading and unloading when performed 
by any such employee; or 

(6) any employee employed in agriculture (A) if such 
employee is employed by an employer who did not, 
during any calendar quarter during the preceding 
calendar year, use more than five hundred man-days 
of agricultural labor, (B) if such employee is the 
parent, spouse, child, or other member of his employ- 
er's immediate family, (C) if such employee (i) is 
employed as a hand harvest laborer and is paid on a 
piece rate basis in an operation which has been, and 
is customarily and generally recognized as having 
been, paid on a piece rate basis in the region of 
employment, (ii) commutes daily from his permanent 
residence to the farm on which he is so employed, and 
(Hi) has been employed in agriculture less than thir- 

"The last clause of section 13(aX3) of the Act was added by section 4(a) of the Fair Labor 
Standards Amendments of 1977, effective January 1, 1978 See also section 13(bX29) of the 
Act, as added by the 1977 Amendments. 



teen weeks during the preceding calendar year, (D) if 
such employee (other than an employee described in 
clause (C) of this subsection) (i) is sixteen years of age 
or under and is employed as a hand harvest laborer, 
is paid on a piece rate basis in an operation which 
has been, and is customarily and generally recognized 
as having been, paid on a piece rate basis in the 
region of employment, (ii) is employed on the same 
farm as his parent or person standing in the place of 
his parent, and (Hi) is paid at the same piece rate as 
employees over age sixteen are paid on the same farm, 
or (E) if such employee is principally engaged in the 
range production of livestock; 90 or 

(7) any employee to the extent that such employee 
is exempted by regulations, order, or certificate of 
the Secretary issued under section 14; or 

(8) 91 any employee employed in connection with 
the publication of any weekly, semi-weekly, or daily 
newspaper with a circulation of less than four thou- 
sand the major part of which circulation is within 
the county where published or counties contiguous 
thereto; or 

(9) * * * (Repealed) 

[Note: Section 13(a)(9) (relating to motion picture 
theater employees) was repealed by section 23 of the 
Fair Labor Standards Amendments of 1974. The 1974 
amendments created an exemption for such employees 
from the overtime provisions only in section 
13(b)(27).] 

(10) any switchboard operator employed by an 
independently owned public telephone company 
which has not more than seven hundred and fifty 
stations; or 

(11) * * * (Repealed) 

[Note: Section 13(a)(ll) (relating to telegraph 
agency employees) was repealed by section 10 of the 
Fair Labor Standards Amendments of 1974. The 1974 
amendments created an exemption from the overtime 
provisions only in section 13(b)(23), which was re- 
pealed effective May 1, 1976. ] 

(12) any employee employed as a seaman on a 
vessel other than an American vessel; or 

(13) * * * (Repealed) 

[Note: Section 13(a)(13) (relating to small logging 
crews) was repealed by section 23 of the Fair Labor 
Standards Amendments of 1974. The 1974 amend- 



"Prior to the Fair Labor Standards Amendments of 1966, the section 13(aK6) exemption 
was applicable to all agricultural employees For additional changes made by the Fair Labor 
Standards Amendments of 1974, see footnote 87. 

" As amended by the Fair Labor Standards Amendments of 1966 (which deleted the words 
"printed and" which formerly preceded the word "published"). 



- 257 - 



Sec. ISCaXW 






meats created an exemption for such employees from 
the overtime provisions only in Section 13(b)(28).] 

(14) * * * (Repealed) 

[Note: Section 13(a)(14) (relating to employees em- 
ployed in growing and harvesting of shade grown 
tobacco) was repealed by section 9 of the Fair Labor 
Standards Amendments of 1974. The 1974 amend- 
ments created an exemption for certain tobacco pro- 
ducing employees from the overtime provisions only in 
section 13(b)(22). The section 13(b)(22) exemption 
was repealed, effective January 1, 1978, by section 5 of 
the Fair Labor Standards Amendments of 1977.] 

(15) any employee employed on a casual basis in 
domestic service employment to provide babysitting 
services or any employee employed in domestic service 
employment to provide companionship services for 
individuals who (because of age or infirmity) are 
unable to care for themselves (as such terms are 
defined and delimited by regulations of the Secretary). 
(b) The provisions of section 7 shall not apply with 

respect to — 

(1) any employee with respect to whom the Secre- 
tary of Transportation 92 has power to establish 
qualifications and maximum hours of service pursu- 
ant to the provisions of section 204 of the Motor 
Carrier Act, 1935; or 

(2) any employee of an employer engaged in the 
operation of a common carrier by rail and subject to 
the provisions of part I of the Interstate Commerce 
Act; or 

(3) any employee of a carrier by air subject to the 
provisions of title II of the Railway Labor Act; or 

(4) * * * (Repealed) 

[Note: Section 13(b)(4) (relating to employees in the 
canning, processing, marketing, freezing, curing, stor- 
ing, packing for shipment, or distributing of any kind 
of fish, shellfish, or other aquatic forms of animal or 
vegetable life, or any byproduct thereof) was repealed, 
effective May 1, 1976, by section 11 of the Fair Labor 
Standards Amendments of 1974.] 

(5) any individual employed as an outside buyer 
of poultry, eggs, cream, or milk, in their raw or 
natural state; or 

(6) any employee employed as a seaman; or 

(7) * * * (Repealed) 

[Note: Section 13(b)(7) (relating to any driver, oper- 
ator, or conductor employed by an employer engaged 
in the business of operating a street, suburban or 



interurban electric railway, or local trolley or motor- 
bus carrier) was repealed, effective May 1, 1976, by 
section 21 of the Fair Labor Standards Amendments 
of 1974.]™ 

(8) any employee (other than an employee of a hotel 
or motel who performs maid or custodial services) 
who is employed by an establishment which is a hotel, 
motel, or restaurant 94 and who receives compensation 
for employment in excess of forty-four hours 95 in any 
workweek at a rate not less than one and one-half 
times the regular rate at which he is employed; or 

[Effective January 1, 1979, such section is repealed.] 

(9) any employee employed as an announcer, 
news editor, or chief engineer by a radio or televi- 
sion station the major studio of which is located (A) 
in a city or town of one hundred thousand popula- 
tion or less, according to the latest available decen- 
nial census figures as compiled by the Bureau of the 
Census, except where such city or town is part of a 
standard metropolitan statistical area, as defined 
and designated by the Bureau of the Budget, which 
has a total population in excess of one hundred 
thousand, or (B) in a city or town of twenty-five / » 
thousand population or less, which is part of such 

an area but is at least 40 airline miles from the 
principal city in such area; or 

(10)(Aj any salesman, partsman, or mechanic pri- 
marily engaged in selling or servicing automobiles, 
trucks, or farm implements, if he is employed by a 
nonmanufacturing establishment primarily engaged 
in the business of selling such vehicles or implements 
to ultimate purchasers; or 

(B) any salesman primarily engaged in selling trail- 
ers, boats, or aircraft, if he is employed by a nonman- 
ufacturing establishment primarily engaged in the 
business of selling trailers, boats, or aircraft to ulti- 
mate purchasers; 96 or 

(11) any employee employed as a driver or driver's 
helper making local deliveries, who is compensated 



vhich substituted 



"Prior to the Fair Labor Standards Amendments of 1966. employees of local transit 
companies were exempt from both the Act's minimum wage and overtime requirements 

"The portion of section 13<bK8) pertaining to "an institution (other than a hospital! 
primarily engaged in the care of the sick, the aged or the mentally ill or defective" was 
deleted by the 1974 Amendments as provision was made for such establishments in section 
7(jl Former subparagraph (Bl of section 13(bX8>, relating to hotel or motel employees 
performing maid or custodial services, was repealed, effective May 1, 1977, by the Fair Labor 
Standards Amendments of 1974 Prior to the Fair Labor Standards Amendments of 1966. all 
hotel, motel and restaurant employees were exempt from both the Act's minimum wage and 
overtime requirements. 

" As amended by section 14(al of the Fair Labor Standards Amendments of 1977, effective 
January 1, 1978 From May 1. 1975, through December SI, 1977, the overtime standard for 
such employees was 46 hours From May 1, 1974, through April 30, 1975. the standard was 48 

™ Boats were added by the Fair Labor Standards Amendments of 1974 Prior to these 
Amendments, the overtime exemption in subsection (B) also applied to partsmen and 
mechanics An earlier minimum wage exemption for any employee of a retail or service 
establishment which is primarily engaged in the business of selling automobiles, trucks or 
farm implements was repealed by the Fair Labor Standards Amendments of 1966. 



258 



Sec. 13(bXU) 



for such employment on the basis of trip rates, or 
other delivery payment plan, if the Secretary shall 
find that such plan has the general purpose and 
effect of reducing hours worked by such employees 
to, or below, the maximum workweek applicable to 
them under section 7(a); or 

(12) any employee employed in agriculture or in 
connection with the operation or maintenance of 
ditches, canals, reservoirs, or waterways, not owned or 
operated for profit, or operated on a sharecrop basis, 
and which are used exclusively for supply and storing 
of water for agriculture purposes, 91 or 

(13) any employee with respect to his employment in 
agriculture by a farmer, notwithstanding other em- 
ployment of such employee in connection with live- 
stock auction operations in which such farmer is 
engaged as an adjunct to the raising of livestock, 
either on his own account or in conjunction with 
other farmers, if such employee (A) is primarily em- 
ployed during his workweek in agriculture by such 
farmer, and (B) is paid for his employment in connec- 
tion with such livestock auction operations at a wage 
rate not less than that prescribed by section 6(a)(1); 98 
or 

(14) any employee employed within the area of pro- 
duction (as defined by the Secretary) by an establish- 
ment commonly recognized as a country elevator, in- 
cluding such an establishment which sells products 
and services used in the operation of a farm, if no 
more than five employees are employed in the estab- 
lishment in such operations; " or 

(15) any employee engaged in the processing of 
maple sap into sugar (other than refined sugar) or 
syrup; l0 ° or 

(16) any employee engaged (A) in the transportation 
and preparation for transportation of fruits or vegeta- 
bles, whether or not performed by the farmer, from the 
farm to a place of first processing or first marketing 
within the same State, or (B) in transportation, 
whether or not performed by the farmer, between the 
farm and any point within the same State of persons 
employed or to be employed in the harvesting of fruits 
or vegetables; 101 or 



repealed by the Fair Labor 



•' A minimum wage exemption for these employees 
Standards Amendments of 1966. 

•• Ibid. 

"Ibid 

,0 ° The exemption applicable to the ginning of cotton and the processing of sugar beets and 
sugar cane was deleted from section 13(bK15) by the Fair Labor Standards Amendments of 
1974 and provision was made for such employees in sections 13(bX25) and 13(bK26). The 
exemptions in sections 13(bX25) and 13(bX26) were repealed, effective January 1, 1978, by the 
Fair Labor Standards Amendments of 1977, and provision was made for such employees in 
sections 13(i) and 13(j), which were added to the Act by those Amendments. 

'•■ See footnote 97. 



(17) any driver employed by an employer engaged in 
the business of operating taxicabs; 102 or 

(18) * * * (Repealed) 

[Note: Section 13(b)(18) (relating to any employee of 
a retail or service establishment who is employed 
primarily in connection with the preparation or offer- 
ing of food or beverages for human consumption, 
either on the premises, or by such services as catering, 
banquet, box lunch, or curb or counter service, to the 
public, ti employees, or to members or guests of mem- 
bers of clubs) was repealed, effective May 1, 1976, by 
section 15 of the Fair Labor Standards Amendments 
of 1974.] 103 

(19) * * * (Repealed) 

[Note: Section 13(b)( 1 9 )( relating to any employee of 
a bowling establishment) was repealed, effective May 
1, 1976, by section 16 of the Fair Labor Standards 
Amendments of 1974.] 

(20) any employee of a public agency who in any 
workweek is employed in fire protection activities or 
any employee of a public agency who in any workweek 
is employed in law enforcement activities (including 
security personnel in correctional institutions), if the 
public agency employs during the workweek less than 
5 employees in fire protection or law enforcement 
activities, as the case may be; 104 or 

[Note: Section 6(c)(3) of the Fair Labor Standards 
Amendments of 1974 provided as follows: "The Secre- 
tary of Labor shall in the calendar year beginning 
January 1, 1976, conduct (A) a study of the average 
number of hours in tours of duty in work periods in 
the preceding calendar year of employees (other than 
employees exempt from section 7 of the Fair Labor 
Standards Act of 1938 by section 13(b)(20) of such 
Act) of public agencies who are employed in fire 
protection activities, and (B) a study of the average 
number of hours in tours of duty in work periods in 
the preceding calendar year of employees (other than 
employees exempt from section 7 of the Fair Labor 
Standards Act of 1938 by section 13(b)(20) of such 
Act) of public agencies who are employed in law 
enforcement activities (including security personnel 
in correctional institutions). The Secretary shall pub- 
lish the results of each such study in the Federal 
Register. "] 



'" ibid 

103 Ibid. 

1IH Prior to January 1, 1975, section 13(bX20) exempted "any employee of a public agency 
who is employed in fire protection or law enforcement activities (including security person- 
nel in correctional institutions)". A partial overtime exemption for public agencies having 5 
or more such employees is provided by section 7(k) of the Act. 



259 



Sec. 13(bX21) 



(21) any employee who is employed in domestic 
service in a household and who resides in such house- 
hold; or 

(22) * * * (Repealed) 

[Note: Section 13(b)(22) (relating to employees em- 
ployed in the growing and harvesting of shade grown 
tobacco 105 ) was repealed, effective January 1 , 1 978, by 
section 5 of the Fair Labor Standards Amendments of 
1977.] 

(23) *** (Repealed) 

[Note: Section 13(b)(23) (relatiny to any employee 
or proprietor in a retail or service establishment 
which qualifies as an exempt retail or service estab- 
lishment under section 13(a)(2), who is engayed in 
handling telegraphic messages for the public 106 > was 
repealed effective May 1, 1976, by section 10 of the 
Fair Labor Standards Amendments of 1974.] 

(24) any employee who is employed with his spouse 
by a non-profit educational institution to serve as the 
parents of children — 

(A) who are orphans or one of whose natural 
parents is deceased, and 107 

(B) who are enrolled in such institution and 
reside in residential facilities of the institution, 

while such children are in residence at such institu- 
tion, if such employee and his spouse reside in such 
facilities, receive, without cost, board and lodging 
from such institution, and are together compensated, 
on a cash basis, at an annual rate of not less than 
$10,000; or 

(25) * * * (Repealed) 

[Note: Section 13(b)(25) (relating to any employee 
engaged in ginning cotton for market in any place of 
employment located in a county where cotton is grown 
in commercial quantities 108 ) was repealed by section 
6(a) of the Fair Labor Standards Amendments of 1977, 
and is replaced by new section 13(i), added by section 
6(b) of those Amendments, which provides a more 
limited overtime exemption for such employees. Both 
changes were effective January 1, 1978.] 

(26) * * * (Repealed) 

[Note: Section 13(b)(26) (relating to any employee 
who is engaged in the processing of sugar beets, sugar 
beet molasses, or sugarcane into sugar (other than 
refined sugar) or syrup was repealed by section 7(a) of 



the Fair Labor Standards Amendments of 1977, and is 
replaced by new section 13(j), added by section 7(b) of 
those Amendments, which provides a more limited 
overtime exemption for such employees. Both changes 
were effective January 1, 1978.] 

(27) any employee employed by an establishment 
which is a motion picture theater; 109 or 

(28) any employee employed in planting or tending 
trees, cruising, surveying, or felling timber, or in 
preparing or transporting logs or other forestry prod- 
ucts to the mill, processing plant, railroad, or other 
transportation terminal, if the number of employees 
employed by his employer in such forestry or lumber- 
ing operations does not exceed eight; no or 

(29) !11 any employee of an amusement or recreation- 
al establishment located in a national park or national 
forest or on land in the National Wildlife Refuge System 
if such employee (A) is an employee of a private entity 
engaged in providing services or facilities in a national 
park or national forest, or on land in the National 
Wildlife Refuge System, under a contract with the Sec- 
retary of the Interior or the Secretary of Agriculture, and 
(B) receives compensation for employment in excess of 
fifty-six hours in any workweek at a rate not less than 
one and one-half times the regular rate at which he is 
employed. 

(cXV Except as provided in paragraphs (2) or (4), the 
provisions of section 12 relating to child labor shall not 
apply to any employee employed in agriculture outside 
of school hours for the school district where such em- 
ployee is living while he is so employed, if such employ- 
ee — 

(A) is less than twelve years of age and (i) is 
employed by his parent, or by a person standing in the 
place of his parent, on a farm owned or operated by 
such parent or person, or (ii) is employed, with the 
consent of his parent or person standing in the place 
of his parent, on a farm, none of the employees of 
which are (because of section 13(a)(6)(A)) required to 
be paid at the wage rate prescribed by section 6(a)(5), 

(B) is twelve years or thirteen years of aye and (i) 
such employment is with the consent of his parent or 
person standing in the place of his parent, or (ii) his 
parent or such person is employed on the same farm 
as such employee, or 

(C) is fourteen years of age or older. 



'"'The word "and" 18 substituted for the word "or" pursuant to 120 Cong Rec H2297 
(March 2H, 1974; statement of Congressman Dent) 

"" A minimum wage exemption for these employees was repealed by the Fair Labor 
Standards Amendments of 1966 



'"• A minimum wage exemption for these employees 
Standards Amendments of 1974. 

'■• Ibid. 

'" Added by section 4(b) of the Fair Labor Standards Amendme 
January 1. 1978 



repealed by the Fair Labor 
of 1977. effective 



( 



260 



Sec. 13(cX2) 



(2) The provisions of section 12 relating to child labor 
shall apply to an employee below the age of sixteen 
employed in agriculture in an occupation that the Secre- 
tary of Labor finds and declares to be particularly 
hazardous for the employment of children below the age 
of sixteen, except where such employee is employed by 
his parent or by a person standing in the place of his 
parent on a farm owned or operated by such parent or 
person. 

(3) The provisions of section 12 relating to child labor 
shall not apply to any child employed as an actor or 
performer in motion pictures or theatrical productions, 
or in radio or television productions. 

(4) U2 (A) An employer or group of employers may apply 
to the Secretary for a waiver of the application of section 
12 to the employment for not more than eight weeks in 
any calendar year of individuals who are less than twelve 
years of age, but not less than ten years of age, as hand 
harvest laborers in an agricultural operation which has 
been, and is customarily and generally recognized as 
being, paid on a piece rate basis in the region in which 
such individuals would be employed. The Secretary may 
not grant such a waiver unless he finds, based on objec- 
tive data submitted by the applicant, that— 

(i) the crop to be harvested is one with a particularly 
short harvesting season and the application of section 
12 would cause severe economic disruption in the 
industry of the employer or group of employers applying 
for the waiver; 

(ii) the employment of the individuals to whom the 
waiver would apply would not be deleterious to their 
health or well-being; 

(iii) the level and type of pesticides and other chemi- 
cals used would not have an adverse effect on the 
health or well-being of the individuals to whom the 
waiver would apply; 

(iv) individuals age twelve and above are not availa- 
ble for such employment; and 

(v) the industry of such employer or group of employ- 
ers has traditionally and substantially employed individ- 
uals under twelve years of age without displacing sub- 
stantial job opportunities for individuals over sixteen 
years of age. 

(B) Any waiver granted by the Secretary under subpara- 
graph (A) shall require that— 

(i) the individuals employed under such waiver be 
employed outside of school hours for the school district 
where they are living while so employed; 



(ii) such individuals while so employed commute daily 
from their permanent residence to the farm on which 
they are so employed; and 

(iii) such individuals be employed under such waiver 
(I) for not more than eight weeks between June 1 and 
October 15 of any calendar year, and (II) in accordance 
with such other terms and conditions as the Secretary 
shall prescribe for such individuals' protection. 

(d) The provisions of sections 6, 7, and 12 shall not 
apply with respect to any employee engaged in the 
delivery of newspapers to the consumer or to any 
homeworker engaged in the making of wreaths com- 
posed principally of natural holly, pine, cedar, or 
other evergreens (including the harvesting of the ever- 
greens or other forest products used in making such 
wreaths). 

(e) The provisions of section 7 shall not apply with 
respect to employees for whom the Secretary of Labor 
is authorized to establish minimum wage rates as pro- 
vided in section 6(a)(3), except with respect to employ- 
ees for whom such rates are in effect; and with respect 
to such employees the Secretary may make rules and 
regulations providing reasonable limitations and allow- 
ing reasonable variations, tolerances, and exemptions 
to and from any or all of the provisions of section 7 if he 
shall find, after a public hearing on the matter, and 
taking into account the factors set forth in section 
6(a)(3), that economic conditions warrant such action. 113 

(f) The provisions of sections 6, 7, 11, and 12 shall not 
apply with respect to any employee whose services 
during the workweek are performed in a workplace 
within a foreign country or within territory under the 
jurisdiction of the United States other than the follow- 
ing: a State of the United States; the District of Colum- 
bia; Puerto Rico; the Virgin Islands; Outer Continental 
Shelf lands defined in the Outer Continental Shelf 
Lands Act (ch. 345, 67 Stat. 462); American Samoa; 
Guam; Wake Island; Eniwetok Atoll; Kwajalein Atoll; 
and Johnston Island. IM 

(g) The exemption from section 6 provided by para- 
graphs (2) and (6) of subsection (a) of this section shall 
not apply with respect to any employee employed by an 
establishment (1) which controls, is controlled by, or is 
under common control with, another establishment the 
activities of which are not related for a common busi- 
ness purpose to, but materially support the activities of 
the establishment employing such employee; and (2) 



"*As added by section 8 of the Fair Labor Standards Amendments of 1977, effective 
November 1, 1977. 



'"Section 3 of the American Samoa Labor Standards Amendments of 1956. 

"'Section 1(1) of the Act of August 30, 1957 (71 Stat. 514), as amended by section 2Kb) 
of the Act of July 12, 1960 (74 Stat. 417), and by section 213 of the Fair Labor Standards 
Amendments of 1966, and by Section 1225 of the Panama Canal Act of 1979 (93 Stat. 468). 



- 261 



Sec. 13(g) 

whose annual gross volume of sales made or business 
done, when combined with the annual gross volume of 
sales made or business done by each establishment 
which controls, is controlled by, or is under common 
control with, the establishment employing such employ- 
ee, exceeds $10,000,000 (exclusive of excise taxes at the 
retail level which are separately stated), except that the 
exemption from section 6 provided by paragraph (2) of 
subsection (a) of this section shall apply with respect to 
any establishment described in this subsection which 
has an annual dollar volume of sales which would 
permit it to qualify for the exemption provided in para- 
graph (2) of subsection (a) if it were in an enterprise 
described in section 3(s). 

(h) The provisions of section 7 shall not apply for a 
period or periods of not more than fourteen workweeks 
in the aggregate in any calendar year to any employee 
who — 

(1) is employed by such employer — 

(A) exclusively to provide services necessary and 
incidental to the ginning of cotton in an establish- 
ment primarily engaged in the ginning of cotton; 

(B) exclusively to provide services necessary and 
incidental to the receiving, handling, and storing of 
raw cotton and the compressing of raw cotton when 
performed at a cotton warehouse or compress-ware- 
house facility, other than one operated in conjunc- 
tion with a cotton mill, primarily engaged in storing 
and compressing; 

(C) exclusively to provide services necessary and 
incidental to the receiving, handling, storing, and 
processing of cottonseed in an establishment pri- 
marily engaged in the receiving, handling, storing, 
and processing of cottonseed; or 

(D) exclusively to provide services necessary and 
incidental to the processing of sugar cane or sugar 
beets in an establishment primarily engaged in the 
processing of sugar cane or sugar beets; and 

(2) receives for — 

(A) such employment by such employer which is 
in excess of ten hours in any workday, and 

(B) such employment by such employer which is 
in excess of forty-eight hours in any workweek, 

compensation at a rate not less than one and one-half 
times the regular rate at which he is employed 
Any employer who receives an exemption under this 
subsection shall not be eligible for any other exemption 
under this section or section 7. 



(i) "■ The provisions of section 7 shall not apply for a 
period or periods of not more than fourteen workweeks in 
the aggregate in any period of fifty-two consecutive 
weeks to any employee who— 

(1) is engaged in the ginning of cotton for market in 
any place of employment located in a county where 
cotton is grown in commercial quantities; and 

(2) receives for any such employment during such 
workweeks— 

(A) in excess of ten hours in any workday, and 

(B) in excess of forty-eight hours in any workweek, 
compensation at a rate not less than one and one-half 
times the regular rate at which he is employed. No week 
included in any fifty-two week period for purposes of the 
preceding sentence may be included for such purposes 
in any other fifty-two week period. 

(j) ,16 The provisions of section 7 shall not apply for a 
period or periods of not more than fourteen workweeks in 
the aggregate in any period of fifty-two consecutive 
weeks to any employee who— 

(1) is engaged in the processing of sugar beets, 
sugar beet molasses, or sugar cane into sugar (other 
than refined sugar) or syrup; and 

(2) receives for any such employment during such 
workweeks— 

(A) in excess of ten hours in any workday, and 

(B) in excess of forty-eight hours in any workweek, 
compensation at a rate not less than one and one-half 
times the regular rate at which he is employed. No week 
included in any fifty-two week period for purposes of the 
preceding sentence may be included for such purposes 
in any other fifty-two week period. 

Learners, Apprentices, Students, and Handicapped 
Workers 

Sec. 14.*" (a) The Secretary, to the extent necessary in 
order to prevent curtailment of opportunities for employ- 
ment, shall by regulations or by orders provide for the 
employment of learners, of apprentices, and of messen- 
gers employed primarily in delivering letters and mes- 
sages, under special certificates issued pursuant to regu- 
lations of the Secretary, at such wages lower than the 
minimum wage applicable under section 6 and subject 
to such limitations as to time, number, proportion, and 
length of service as the Secretary shall prescribe. 

(b)(1)(A) The Secretary, to the extent necessary in 
order to prevent curtailment of opportunities for em- 



"' Added by section 6(b) of the Fair Labor Standards Amendments of 1977, effective 
January 1, 1978. 

'"Added by section 7(b) of the Fair Labor Standards Amendment* of 1977. effective 
January 1. 1978. 

'" As amended by section 24 of the Fair Labor Standards Amendments of 1974. 



c 



262 



Sec. lJtfbXlXA) 

ployment, shall by special certificate issued under a 
regulation or order provide, in accordance with subpara- 
graph (B), for the employment, at a wage rate not less 
than 85 per centum of the otherwise applicable wage 
rate in effect under section 6 or not less than $1.60 an 
hour, whichever is the higher (or in the case of employ- 
ment in Puerto Rico or the Virgin Islands not described 
in section 5(e), at a wage rate not less than 85 per 
centum of the otherwise applicable wage rate in effect 
under section 6(c)), of full-time students (regardless of 
age but in compliance with applicable child labor laws) 
in retail or service establishments. 

(B) Except as provided in paragraph (4)(B), during 
any month in which full-time students are to be em- 
ployed in any retail or service establishment under certi- 
ficates issued under this subsection the proportion of 
student hours of employment to the total hours of em- 
ployment of all employees in such establishment may 
not exceed — 

(i) in the case of a retail or service establishment 
whose employees (other than employees engaged in 
commerce or in the production of goods for commerce) 
were covered by this Act before the effective date of 
the Fair Labor Standards Amendments of 1974 — 

(I) the proportion of student hours of employment 
to the total hours of employment of all employees in 
such establishment for the corresponding month of 
the immediately preceding twelve-month period, 

(II) the maximum proportion for any correspond- 
ing month of student hours of employment to the 
total hours of employment of all employees in such 
establishment applicable to the issuance of certifi- 
cates under this section at any time before the 
effective date of the Fair Labor Standards Amend- 
ments of 1974 for the employment of students by 
such employer, or 

(III) a proportion equal to one-tenth of the total 
hours of employment of all employees in such estab- 
lishment, 

whichever is greater; 

(ii) in the case of retail or service establishment 
whose employees (other than employees engaged in 
commerce or in the production of goods for commerce) 
are covered for the first time on or after the effective 
date of the Fair Labor Standards Amendments of 
1974— 

(I) the proportion of hours of employment of 
students in such establishment to the total hours of 
employment of all employees in such establishment 
for the corresponding month of the twelve-month 



period immediately prior to the effective date of 
such Amendments, 

(II) the proportion of student hours of employ- 
ment to the total hours of employment of all em- 
ployees in such establishment for the corresponding 
month of the immediately preceding twelve-month 
period, or 

(III) a proportion equal to one-tenth of the total 
hours of employment of all employees in such estab- 
lishment, 

whichever is greater; or 

(Hi) in the case of a retail or service establishment 
for which records of student hours worked are not 
available, the proportion of student hours of employ- 
ment to the total hours of employment of all employ- 
ees based on the practice during the immediately 
preceding twelve-month period in (I) similar estab- 
lishments of the same employer in the same general 
metropolitan area in which such establishment is 
located, (II) similar establishments of the same or 
nearby communities if such establishment is not in a 
metropolitan area, or (III) other establishments of the 
same general character operating in the community or 
the nearest comparable community. 
For purpose of clauses (i), (ii), and (Hi) of this subpara- 
graph, the term "student hours of employment" means 
hours during which students are employed in a retail or 
service establishment under certificates issued under 
this subsection. 

(2) The Secretary, to the extent necessary in order to 
prevent curtailment of opportunities for employment, 
shall by special certificate issued under a regulation or 
order provide for the employment, at a wage rate not 
less than 85 per centum of the wage rate in effect under 
section 6(a)(5) or not less than $1.30 an hour, whichever 
is the higher (or in the case of employment in Puerto 
Rico or the Virgin Islands not described in section 5(e), 
at a wage rate not less than 85 per centum of the wage 
rate in effect under section 6(c)), of full-time students 
(regardless of age but in compliance with applicable 
child labor laws) in any occupation in agriculture. 

(3) The Secretary, to the extent necessary in order to 
prevent curtailment of opportunities for employment, 
shall by special certificate issued under a regulation or 
order provide for the employment by an institution of 
higher education, at a wage rate not less than 85 per 
centum of the otherwise applicable wage rate in effect 
under section 6 or not less than $1.60 an hour, which- 
ever is the higher (or in the case of employment in 
Puerto Rico or the Virgin Islands not described in sec- 



- 263 



Sec. IMbXS) 

Hon 5(e), at a wage rate not less than 85 per centum of 
the wage rate in effect under section 6(c)), of full-time 
students (regardless of age but in compliance with appli- 
cable child labor laws) who are enrolled in such institu- 
tion. The Secretarg shall bg regulation prescribe stand- 
ards and requirements to insure that this paragraph will 
not create a substantial probabilitg of reducing the full- 
time emplogment opportunities of persons other than 
those to whom the minimum wage rate authorized bg 
this paragraph is applicable. 

(4)(A) A special certificate issued under paragraph 
(I), (2), or (3) shall provide that the student or students 
for whom it is issued shall, except during vacation 
periods, be emploged on a part-time basis and not in 
excess of twentg hours in any workweek. 

(B) 118 If the issuance of a special certificate under 
paragraph (I) or (2) for an employer will cause the 
number of students employed by such employer under 
special certificates issued under this subsection to 
exceed six, the Secretary may not issue such a special 
certificate for the employment of a student by such 
employer unless the Secretary finds employment of such 
student will not create a substantial probability of re- 
ducing the full-time employment opportunities of per- 
sons other than those employed under special certifi- 
cates issued under this subsection. If the issuance of a 
special certificate under paragraph (I) or (2) for an 
employer will not cause the number of students em- 
ployed by such employer under special certificates 
issued under this subsection to exceed six — 

(i) the Secretary may issue a special certificate 
under paragraph (I) or (2) for the employment of a 
student by such employer if such employer certifies to 
the Secretary that the employment of such student 
will not reduce the full-time employment opportuni- 
ties of persons other than those employed under spe- 
cial certificates issued under this subsection, and 

(ii) in the case of an employer which is a retail or 
service establishment, subparagraph (B) of paragraph 
(I) shall not apply with respect to the issuance of 
special certificates for such employer under such 
paragraph. 
The requirement of this subparagraph shall not apply in 
the case of the issuance of special certificates under 
paragraph (3) for the employment of full-time students 
by institutions of higher education; except that if the 
Secretary determines that an institution of higher edu- 
cation is employing students under certificates issued 



under paragraph (3) but in violation of the requirements 
of that paragraph or of regulations issued thereunder, 
the requirements of this subparagraph shall apply with 
respect to the issuance of special certificates under 
paragraph (3) for the employment of students by such 
institution. 

(C) No special certificate may be issued under this 
subsection unless the employer for whom the certificate 
is to be issued provides evidence satisfactory to the 
Secretary of the student status of the employees to be 
employed under such special certificate. 

(D) " 9 To minimize paperwork for, and to encourage, 
small businesses to employ students under special certifi- 
cates issued under paragraphs (1) and (2), the Secretary 
shall, by regulation or order, prescribe a simplified appli- 
cation form to be used by employers in applying for such 
a certificate for the employment of not more than six full- 
time students. Such an application shall require only — 

(i) a listing of the name, address, and business of the 
applicant employer, 

(ii) a listing of the date the applicant began business, 
and 

(iii) the certification that the employment of such full- 
time students will not reduce the full-time employment 
opportunities of persons other than persons employed 
under special certificates. 

(cXV Except as otherwise provided in paragraphs (2) 
and (3) of this subsection, the Secretary of Labor, to the 
extent necessary in order to prevent curtailment of op- 
portunities for employment, shall by regulation or 
order provide for the employment under special certifi- 
cates of individuals (including individuals employed in 
agriculture) whose earning or productive capacity is 
impaired by age or physical or mental deficiency or 
injury, at wages which are lower than the minimum 
wage applicable under section 6 of this Act but not less 
than 50 per centum of such wage and which are com- 
mensurate with those paid nonhandicapped workers in 
industry in the vicinity for essentially the same type, 
quality, and quantity of work. 

(2) The Secretary, pursuant to such regulations as he 
shall prescribe and upon certification of the State 
agency administering or supervising the administration 
of vocational rehabilitation services, may issue special 
certificates for the employment of— 

(A) handicapped workers engaged in work which is 
incidental to training or evaluation programs, and 



i of 1977, effective 



Labor Standards Amendn 



of 1977, effective 



- 264 - 



Sec. U(cX2XB) 

(B) multihandicapped individuals and other indi- 
viduals whose earning capacity is so severely im- 
paired that they are unable to engage in competitive 
employment, 
at wages which are less than those required by this 
subsection and which are related to the worker's produc- 
tivity. 

(3XA) The Secretary may by regulation or order pro- 
vide for the employment of handicapped clients in work 
activities centers under special certificates at wages 
which are less than the minimums applicable under 
section 6 of this Act or prescribed by paragraph <1 ) of 
this subsection and which constitute equitable compen- 
sation for such clients in work activities centers. 

(B) For purposes of this section, the term "work activi- 
ties centers" shall mean centers planned and designed 
exclusively to provide therapeutic activities for handi- 
capped clients whose physical or mental impairment is 
so severe as to make their productive capacity inconse- 
quential. 

(d) The Secretary may by regulation or order provide 
that sections 6 and 7 shall not apply with respect to the 
employment by any elementary or secondary school of 
its students if such employment constitutes, as deter- 
mined under regulations prescribed by the Secretary, an 
integral part of the regular education program provided 
by such school and such employment is in accordance 
with applicable child labor laws. 

Prohibited Acts 

Sec. 15. (a) After the expiration of one hundred and 
twenty days from the date of enactment of this Act. it 
shall be unlawful for any person — 

(1) to transport, offer for transportation, ship, de- 
liver, or sell in commerce, or to ship, deliver, or sell 
with knowledge that shipment or delivery or sale 
thereof in commerce is intended, any goods in the 
production of which any employee was employed in 
violation of section 6 or section 7, or in violation of 
any regulation or order of the Secretary of Labor 120 
issued under section 14; except that no provision of 
this Act shall impose any liability upon any common 
carrier for the transportation in commerce in the 
regular course of its business of any goods not pro- 
duced by such common carrier, and no provision of 
this Act shall excuse any common carrier from its 
obligation to accept any goods for transportation; and 
except that any such transportation, offer, shipment, 
delivery, or sale of such goods by a purchaser who 

""See footnote 30 



acquired them in good faith in reliance on written 
assurance from the producer that the goods were 
produced in compliance with the requirements of the 
Act, and who acquired such goods for value without 
notice of any such violation, shali not be deemed 
unlawful; ,21 

(2) to violate any of the provisions of section 6 or 
section 7, or any of the provisions of any regulation 
or order of the Secretary I22 issued under section 14; 

'3) to discharge or in any other manner discrimi- 
nate against any employee because such employee 
has filed any complaint or instituted or caused to be 
instituted any proceeding under or related to this 
Act, or has testified or is about to testily in any such 
proceeding, or has served or is about to serve on an 
industry committee; 

(4) to violate any of the provisions of section 12; 

(5) to violate any of the provisions of section 13(c) 
or any regulation ur order made or continued in 
effect under the provisions of section 11(d), or to 
make any statement, report, or record filed or kept 
pursuant to the provisions of such section or of any 
regulation or order thereunder, knowing such state- 
ment, report, or record to be false in a material 
respect. 123 

(b) For the purposes of subsection (a)(1) proof that any 
employee was employed in any place of employment 
where goods shipped or sold in commerce were pro- 
duced, within ninety days prior to the removal of the 
goods from such place of niployment, shall be prima 
facie evidence that such employee was engaged in the 
production of such goods. 

Penalties 124 

Sec. 16. (a) Any person who willfully violates any of 
the provisions of section 15 shall upon conviction there- 
of be subject to a fine of not more than $10,000, or to 
imprisonment for not more than six months, or both. 
No person shall be imprisoned under this subsection 
except for an offense committed after the conviction of 
such person for a prior offense under this subsection. 

(b) Any employer who violates the provisions of sec- 
tion 6 or section 7 of this Act shall be liable to the 
employee or employees affected in the amount of their 
unpaid minimum wages, or their unpaid overtime com- 



"' As amended by section Mai of the Fair Labor Standards Amendr 
m See footnote 30 

'"As amended by section 13lb) of the Fair Labor Standards Amendr 
124 The Portal-to-Portal Act of 1947 relieves employers from certain liabiltti 
menU under this Act in circumstances specified in that Act 



us of 1919 



- 265 



Sec. 1 6(b) 



pensation, as the case may be, and in an additional 
equal amount as liquidated damages. Any employer who 
violates the provisions of section 15(a)(3) of this Act shall 
be liable for such legal or equitable relief as may be 
appropriate to effectuate the purposes of section 15(a)(3), 
including without limitation employment, reinstatement, 
promotion, and the payment of wages lost and an addi- 
tional equal amount as liquidated damages. An action to 
recover the liability prescribed in either of the preceding 
sentences may be maintained against any employer 
(including a public agency) in any Federal or State 
court of competent jurisdiction by any one or more 
employees for and in behalf of himself or themselves 
and other employees similarly situated. No employee 
shall be a party plaintiff to any such action unless he 
gives his consent in writing to become such a party and 
such consent is filed in the court in which such action 
is brought. 125 The court in such action shall, in addition 
to any judgment awarded to the plaintiff or plaintiffs, 
allow a reasonable attorney's fee to be paid by the 
defendent, and costs of the action. The right provided 
by this subsection to bring an action by or on behalf 
of any employee, and the right of any employee to 
become a party plaintiff to any such action, shall 
terminate upon the Filing of a complaint by the Secre- 
tary of Labor in an action under section 17 in which 
(1) restraint is sought of any further delay in the 
payment of unpaid minimum wages, or the amount of 
unpaid overtime compensation as the case may be, 
owing to such employee under section 6 or section 7 of 
this Act by an employer liable therefor under the 
provisions of this subsection or (2) legal or equitable 
relief is sought as a resuit of alleged violations of section 
15(a)(3).' 26 

(c) The Secretary 127 is authorized to supervise the 
payment of the unpaid minimum wages or the unpaid 
overtime compensation owing to any employee or em- 
ployees under section 6 or 7 of this Act, and the agree- 
ment of any employee to accept such payment shall 
upon payment in full constitute a waiver by such em- 
ployee of any right he may have under subsection (b) of 
this section to such unpaid minimum wages or unpaid 
overtime compensation and an additional equal 
amount as liquidated damages. The Secretary may 
bring an action in any court of competent jurisdiction 
to recover the amount of the unpaid minimum wages or 



overtime compensation and an equal amount os liquidat- 
ed damages.'" The right provided by subsection (b) to 
bring an action by or on behalf of any employee to 

recover the liability specified in the first sentence of such 
subsection and of any employee to become a party plain- 
tiff to any such action shall terminate upon the filing of 
a complaint by the Secretary in an action under this 
subsection in which a recovery is sought of unpaid 
minimum wages or unpaid overtime compensation under 
sections 6 and 7 or liquidated or other damages provided 
by this subsection owing to such employee by an employ- 
er liable under the provisions of subsection (b), unless 
such action is dismissed without prejudice on motion of 
the Secretary. Any sums thus recovered by the Secre- 
tary on behalf of an employee pursuant to this subsec- 
tion shall be held in a special deposit account and shall 
be paid, on order of the Secretary, directly to the 
employee or employees affected. Any such sums not 
paid to an employee because of inability to do so within 
a period of three years shall be covered into the Treas- 
ury of the United States as miscellaneous receipts. In 
determining when an action is commenced by the Sec- 
retary under this subsection for the purposes of the 
statutes 129 of limitations provided in section 6(a) of the 
Portal-to-Portal Act of 1947, it shall be considered to be 
commenced in the case of any individual claimant on 
the date when the complaint is filed if he is specifically 
named as a party plaintiff in the complaint, or if his 
name did not so appear, on the subsequent date on 
which his name is added as a party plaintiff in such 
action. 1J0 

<d> In any action or proceeding commenced prior to, 
on, or after the date of enactment of this subsection, no 
employer shall be subject to any liability or punish- 
ment under this Act or the Portal-to-Portal Act of 1947 
on account of his failure to comply with any provision 
or provisions of such Acts il) with respect to work 
heretofore or hereafter performed in a workplace to 
which the exemption in section 13(f) is applicable, (2) 
with respect to work performed in Guam, the Canal 
Zone or Wake Island before the effective date of this 
amendment of subsection <d), or (3) with respect to 
work performed in a possession named in section 6(a) 
(3) at any time prior to the establishment by the Secre- 



'■ Am,-ne!rnent pro 

"The Fair Labor Standards Amendments <.l 
lu.iry I. 19TK. to authorize .1 private n^h! oi a 
Act Trior to this amendment, only the Seer 



■ . Portal <\ctoflSM7 
i amended subsection 1 t'.i t> ■. effi 
for violations of subsection Iota 

ol Labor was authorized to brii 



'••The provision for liquidated damages was added b„v the Fair Labor Standards Amend 
nients of 1971 These Amendments also delated the prior requirements that section litel 
suit* be brought only or the written request ol 'tie employee and if the case did not involve 

any issue ot law wlpch had not l».i. finally set:le-.l hv the courts 

'•'" Amended bj section 61IJ ol 1 he K.ur Labia Standards) Amendments ol 1966 

""■ Section 14 of the Fan Labor Standards \mendmenls of |94ft, as amended h\ Reort»ani 

zutiun Plan N'.i > a( l'i."io ,,i,J 1 ,„■ Fair Labor Standards Amendments of 1966. 



- 266 - 



Sec. 16(d) 



tary, as provided therein, of a minimum wage rate 
applicable to such work. 131 

(e) Any person who violates the provisions of section 
12, relating to child labor, or any regulation issued 
under that section, shall be subject to a civil penalty of 
not to exceed S 1.000 for each such violation. In deter- 
mining the amount of such penalty, the appropriateness 
of such Dtnaltu to the size of the business of the person 
charged and the gravity of the violation shall he consid- 
ered. The amount ot such penalty, uhen finally deter- 
mined, may be — 

(/) deducted from any sums owing by the United 

States to the person charged; 

(2) recovered in a ch il action brought by the Secre- 
tary in any court of competent jurisdiction, in which 
litigation the Secretary shall be represented by the 
Solicitor of Labor; or 

(3) ordered by the court, in an action brought for a 
violation of section 15(a)(4), to be paid to the Secre- 
tary. 

Any administrative determination by the Secretary of 
the amount of such penalty shall be final, unless within 
fifteen days after receipt of notice thereof by certified 
mail the person charged with the violation takes excep- 
tion to the determination that the violations for which 
the penalty is imposed occurred, in which event final 
determination nf the penalty shall be made in an admin- 
istrative proceeding after opportunity for hearing in 
accordance itith section 554 of title 5, United States 
Code, and r-gulations to be promulgated by the Secre- 
tary. Sums collected us penalties pursuant to this sec- 
tion shall be applied toward reimbursement of the costs 
of determining the violations and assessing and collect- 
ing such penalties, in accordance with Ihe provision of 
section 2 of an Act entitled An Act V> authorize ihe 
Department of Labor to make special statistical studies 
upon payment of the cost thereof, and r or other pur- 
poses" >2fH'.S (\ 9a). 

Injunction Proceedings 

SEC. 17. The district courts, together with the United 
States District Court for the District of the ('ana! 
Zone, the District Court of the Virgin Islands, and the 
District Court of Guam shall have jurisdiction, for 
cause shown, to restrain violations of section 15, in- 
cluding in the case of violations of section 15(a)(2J the 
restraint of any withholding of payment of minimum 
wages or overtime compensation found hy the court to 



be due to employees under this Act (except sums 
which employees are barred from recovering, at the 
time of the commencement of the action to restrain 
the violations, by virtue of the provisions of section 6 
of the Portal-to-Portal Act of 1947 ). 132 

Relation to Other Laws 

Sec. 18. (a) No provision of this Act oi of any order 
thereunder shall excuse noncompliance with any Fed- 
eral or State law or municipal ordinance establishing a 
minimum wage higher than the minimum wage es ab- 
lished under this Act or a maximum workweek lovver 
than the maximum workweek established under this 
Act, and no provision of this A< r relating to the employ- 
ment of child labor shall justify noncompliance with 
any Federal or State law or municipal ordinance estab 
lishing a higher standard than the standard established 
under this Act. No provision of this Act shall h:.- :ifj 
any employer in reducing a wage pad bj nim ■ hkb is 
in excess of the applicable minimum wage under this 
Act, o'- justify any employer in increasing h urs of 
employment maintained by him which are shorter 
than the maximum hours applicable under Ibis Act. 

(b) Notwithstanding any other provision of this Act 
(other than sec 'ion 13(f)) or any ether lau — 

(1 • any Fcdt ? ral employee in the Canal Zone engaged 

in employment of the kind described in section 

5102(c)(7) of title 5, United States Code, o) IM 
(..; any employee employed in 

fund instrumentality under the 

Armed Forces, 1 "" 
shall have his basic compensation ficnl vr adjusted at a 
wage, rate which is not less than the appropriate, a age 
rate provided for in section 6(a)(1) of this Act (except, 
that the wage rate provided for in section 6(b) shall 
apply to any employee who performed services during 
the workweek in a work place within the Canal Zone', 
and shall hare his overtime compensation set at an 
hourly rate not less than the overtime rate provided /.- r 
in section 7(aMl ' of th is Ad 



unappropriated 
Jit tion ■ >. the 



267 - 



< 



Sec. 19 

Separability of Provisions 

Sec. 19. If any provision of this Act or the application 
of such provision to any person or circumstances is held 
invalid, the remainder of the Act and the application of 
such provision to other persons or circumstances shall 
not be affected thereby. 

Approved, June 2o, 1938. 135 



<* 



• 'The Fair Labor Si retards Vmendments ol 1949 were approved tobei 26, I 149; thi 
r'liir Laboi Standards \mendmcnl! >l 19.") uiri approved August 1*2, 195fi; the American 
Sir.iu.t l.abi'r Standards Amendments were approved August v 1956; 1 1- e Fair Labor 
Standards \ ,,„ ,u! nents .,1 liHil were approved May .', 1961; tin- Fair [jibor Standards 
Ami ndmenl i ..I I i wen- ippro\ed September 2:1, I96S the Fair Labor Standard- Amend- 
ments at i'l'l lA.rc approved Apr.l \ 1971; and the Fur Labor Standards Amendments of 



" 



268 



ADDITIONAL PROVISIONS OF FAIR LABOR STANDARDS AMENDMENTS OF 1977 

(91 Stat. 1245) 



[Public Law 95-151] 
[95th Congress] [First Session] 

AN ACT 

To amend the Fair Labor Standards Act of 1938 to 
increase the minimum wage rate under that Act, and 
for other purposes. 

Be it enacted by the Senate and House of Representatives 
of the United States of America in Congress assembled, 
That this Act may be cited as the "Fair Labor Stand- 
ards Amendments of 1977". 

[Sections 2(a) through 2(d) and sections 3 through 14, 
inclusive, of the Fair Labor Standards Amendments of 
1977 amend the Fair Labor Standards Act of 1938, and 
are incorporated in their proper place in the Act.] 
Increase in Minimum Wage 

Sec. 2. * * * 

(e)(1) There is established the Minimum Wage Study 
Commission (hereinafter in this subsection referred to as 
the "Commission") which shall conduct a study of the 
Fair Labor Standards Act of 1938 and the social, political, 
and economic ramifications of the minimum wage, over- 
time, and other requirements of that Act. Such study shall 
include but not be limited to — 

(A) the beneficial effects of the minimum wage, in- 
cluding its effect in ameliorating poverty among working 
citizens; 

(B) the inflationary impact (if any) of increases in the 
minimum wage prescribed by that Act; 

(C) the effect (if any) such increases have on wages 
paid employees at a rate in excess of the rate pre- 
scribed by that Act; 

(D) the economic consequence (if any) of authorizing 
an automatic increase in the rate prescribed in that Act 
on the basis of an increase in a wage, price, or other 
index; 

(E) the employment and unemployment effects (if 
any) of providing a different minimum wage for youth, 
and the employment and unemployment effects (if any) 
on handicapped and aged individuals of an increase in 



such rate and of providing a different minimum wage 
rate for such individuals; 

(F) the effect (if any) of the full-time student certifica- 
tion program on employment and unemployment; 

(G) the employment and unemployment effects (if 
any) of the minimum wage; 

(H) the exemptions from the minimum wage and 
overtime requirements of that Act; 

(I) the relationship (if any) between the Federal mini- 
mum wage rates and public assistance programs, in- 
cluding the extent to which employees at such rates are 
also eligible to receive food stamps and other public 
assistance; 

(J) the overall level of noncompliance with that Act; 
and 

(K) the demographic profile of minimum wage work- 
ers. 

(2) The Commission shall conduct a study concerning 
the extent to which the exemptions from the minimum 
wage and overtime requirements of the Fair Labor Stand- 
ards Act of 1938 may apply to employees of conglomer- 
ates, and shall make a report, within one year after the 
date of the appointment of the members of the Commis- 
sion, of the results of such study. For the purposes of this 
paragraph a "conglomerate" means an establishment (A) 
which controls, is controlled by, or is under common 
control with, another establishment the activities of which 
are not related for a common business purpose to the 
activities of the establishment employing such employees 
and (B) whose annual gross volume of sales made or 
business done, when combined with the annual gross 
volume of sales made or business done by each estab- 
lishment which controls, is controlled by, or is under 
common control with, the establishment employing such 
employee, exceeds $100,000,000 (exclusive of excise 
taxes at the retail level which are separately stated). The 
report shall include an analysis of the effects of eliminat- 
ing the exemptions from the minimum wage and overtime 
requirements of such Act that may currently apply to the 
employees of such conglomerates. 

(3) The Commission shall make a report of the results 
of the study conducted pursuant to paragraph (1) thirty-six 
months after the date of the appointment of the members 



269 



of the Commission. The report shall include such recom- 
mendations for legislation as the Commission determines 
are appropriate. The Commission may make interim or 
additional reports which it determines are appropriate. 
Each report shall be made to the President and to the 
Congress. The Commission shall cease to exist thirty 
days after the submission of the report required by this 
paragraph. 

(4)(A) The Commission shall consist of eight members 
as follows: 

(i) Two members appointed by the Secretary of 
Labor. 

(ii) Two members appointed by the Secretary of 
Commerce. 

(iii) Two members appointed by the Secretary of 
Agriculture. 

(iv) Two members appointed by the Secretary of 
Health, Education, and Welfare. 
The appointments authorized under this paragraph shall 
be made within 180 days after the date of enactment of 
this subsection. 

(B) The Chairperson shall be selected by the mem- 
bers of the Commission. Any vacancy in the Commis- 
sion shall not affect its powers and shall be filled in the 
same manner in which the original appointment was 
made. 

(C)(i) Except as provided in clause (ii), members of 
the Commission who are officers or employees of the 
Federal Government shall serve without compensation. 
Other members, while engaged in the activities of the 
Commission, shall be paid at a rate equal to the per 
diem equivalent of the annual rate payable for grade 
GS-18 of the General Schedule under section 5332 of 
title 5, United States Code. 

(ii) While away from their homes or regular places 
of business in the performance of services for the 
Commission, members of the Commission shall be 
allowed travel expenses, including per diem in lieu of 
subsistence, in the same manner as persons em- 
ployed intermittently in the Government service are 
allowed expenses under section 5703 of title 5 of the 
United States Code. 
(5)(A) The Commission may prescribe such rules as 
may be necessary to carry out its duties under this sub- 
section. 

(B) The Commission may hold such hearings, sit and 
act at such times and places, take such testimony, and 
receive such evidence as it deems advisable. 

(C) Upon request of the Commission, the head of any 
Federal department or agency is authorized to detail, 
on a reimbursable basis, any of the personnel of such 



department or agency to the Commission to assist it in 
carrying out its duties under this subsection. 

(D) The Department of Labor shall furnish such pro- 
fessional, technical, and research assistance as re- 
quired by the Commission. 

(E) The Administrator of General Services shall pro- 
vide to the Commission on a reimbursable basis such 
administrative support services as the Commission may 
request to carry out its duties under this subsection. 

(F) The Commission may secure directly from any 
department or agency of the United States such infor- 
mation as the Commission may require to carry out its 
duties under this subsection. Upon request of the Com- 
mission, the head of any such department or agency 
shall furnish such information to the Commission. 

(G) The Commission may use the United States mails 
in the same manner and upon the same conditions as 
other departments and agencies of the United States. 
(6)(A) The Chairperson may appoint an executive direc- 
tor of the Commission who shall perform such duties as 
the Chairperson may prescribe. 

(B) With approval of the Chairperson, the executive i 
director may appoint and fix the pay of such clerical 
personnel as are necessary for the Commission to 

carry out its duties. 

(C) The executive director and staff shall be appoint- 
ed without regard to the provisions of title 5, United 
States Code, governing appointments in the competi- 
tive service, and shall be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 
53 of such title relating to classification and General 
Schedule pay rates but at rates not in excess of the 
annual rate payable for grade GS-18 of the General 
Schedule under section 5332 of such title. 

(D) The executive director, with the concurrence of 
the Chairperson, may obtain temporary and intermittent 
services of experts and consultants in accordance with 
the provisions of section 3109 of title 5, United States 
Code. 

Effective Date 

Sec. 15. (a) Except as provided in sections 3, 14, and 
subsection (b) of this section, the amendments made by 
this Act shall take effect January 1, 1978. 

(b) The amendments made by sections 8, 9, 11, 12, 
and 13 shall take effect on the date of the enactment of 
this Act. 

(c) On and after the date of the enactment of this Act, 
the Secretary of Labor shall take such administrative 
action as may be necessary for the implementation of the 
amendments made by this Act. 

Approved November 1, 1977. 



270 - 



ADDITIONAL PROVISIONS OF FAIR LABOR STANDARDS AMENDMENTS OF 1974 

(88 Stat. 55) 



[Public Law 93-259] 
[93rd Congress] [2d Session] 

AN ACT 

To amend the Fair Labor Standards Act of 1938 to 
increase the minimum wage rate under that Act, to 
expand the coverage of the Act, and for other purposes. 

Be it enacted by the Senate and House of Representa- 
tives of the United States of America in Congress assem- 
bled, That this Act may be cited as the "Fair Labor 
Standards Amendments of 1974". 

[Sections 2 through 6(d)(1) and sections 7 through 27, 
inclusive, of the Fair Labor Standards Amendments of 
1974 amend the Fair Labor Standards Act of 1938, and 
are incorporated in their proper place in the Act. Section 
6(d)(2)(A) and (B) amends the Portal-to-Portal Act of 
1947 and is set forth below.] 

Federal and State Employees 

SEC. 6. * * * 

(2)(A) Section 6 of the Portal-to-Portal Pay Act of 
1947 is amended by striking out the period at the end of 
paragraph (c) and by inserting in lieu thereof a semi- 
colon and by adding after such paragraph the following: 
"(d) with respect to any cause of action brought 



under section 16(b) of the Fair Labor Standards Act 
of 1938 against a State or a political subdivision of a 
State in a district court of the United States on or 
before April 18, 1973, the running of the statutory 
periods of limitation shall be deemed suspended 
during the period beginning with the commencement 
of any such action and ending one hundred and eighty 
days after the effective date of the Fair Labor Stand- 
ards Amendments of 1974, except that such suspen- 
sions shall not be applicable if in such action judg- 
ment has been entered for the defendant on the 
grounds other than State immunity from Federal ju- 
risdiction. " 

(B) Section 11 of such Act is amended by striking out 
"(b)" after "section 16". 



Effective Date 

SEC. 29. (a) Except as otherwise specifically provided, 
the amendments made by this Act shall take effect on 
May 1, 1974. 

(b) Notwithstanding subsection (a), on and after the 
date of the enactment of this Act the Secretary of Labor 
is authorized to prescribe necessary rules, regulations, 
and orders with regard to the amendments made by this 
Act. 

Approved April 8, 1974. 



271 



ADDITIONAL PROVISIONS OF FAIR LABOR STANDARDS AMENDMENTS OF 1966 



[Public Law 89-601] 
[89th Congress] [2d Session] 

AN ACT 

To amend the Fair Labor Standards Act of 1938 to 
extend its protection to additional employees, to raise 
the minimum wage, and for other purposes. 

Be it enacted by the Senate and House of Representa- 
tives of the United States of America in Congress assem- 
bled, That this Act may be cited as the "Fair Labor 
Standards Amendments of 1966". 

[Sections 101 to 501, inclusive, and section 601 (a) of 
the Fair Labor Standards Amendments of 1966 amend 
the Fair Labor Standards Act of 1938, and are incorpo- 
rated in their proper place in the Act.] 

STA TUTE OF LIMIT A TIONS 

Sec. 601. * * * 

(b) Section 6(a) of the Portal-to-Portal Act of 1947 
(Public Law 49, Eightieth Congress) is amended by 
inserting before the semicolon at the end thereof the 
following: ", except that a cause of action arising out of a 
willful violation may be commenced within three years 
after the cause of action accrued". 

EFFECTIVE DATE 

Sec. 602. Except as otherwise provided in this Act, the 
amendments made by this Act shall take effect on 
February I, 1967. On and after the date of the enact- 
ment of this Act the Secretary is authorized to promul- 
gate necessary rules, regulations, or orders with regard 
to the amendments made by this Act. 

STUD Y OF EXCESSI VE O VER TIME 

Sec. 603. The Secretary of Labor is hereby instructed 
to commence immediately a complete study of present 
practices dealing with overtime payments for work in 
excess of forty hours per week and the extent to which 
such overtime work impedes the creation of new job 



opportunities in American industry. The Secretary is 
further instructed to report to the Congress by July 1, 

1967, the findings of such survey with appropriate rec- 
ommendations. 

CANAL ZONE EMPLOYEES AND PANAMA CANAL 
STUDY 

Sec. 604. The Secretary of Labor, in cooperation with 
the Secretary of Defense and the Secretary of State, 
shall (1) undertake a study with respect to (A) wage 
rates payable to Federal employees in the Canal Zone 
engaged in employment of the kind described in para- 
graph (7) of section 202 of the Classification Act of 1949 
(5 U.S.C. 1082(7)) and (B) the requirements of an effec- 
tive and economical operation of the Panama Canal, 
and (2) report to the Congress not later than July 1, 

1968, the results of his study together with such recom- 
mendations as he may deem appropriate. 

STUDY OF WAGES PAID HANDICAPPED CLIENTS IN 
SHELTERED WORKSHOPS 

Sec. 605. The Secretary of Labor is hereby instructed 
to commence immediately a complete study of wage 
payments to handicapped clients of sheltered workshops 
and of the feasibility of raising existing wage standards 
in such workshops. The Secretary is further instructed 
to report to the Congress by July 1, 1967, the findings of 
such study with appropriate recommendations. 

PREVENTION OF DISCRIMINA TION BECA USE OF AGE 

Sec. 606. The Secretary of Labor is hereby directed to 
submit to the Congress not later than January 1, 1967, 
his specific legislative recommendations for implement- 
ing the conclusions and recommendations contained in 
his report on age discrimination in employment made 
pursuant to section 715 of Public Law 88-352. Such 
legislative recommendations shall include, without lim- 
itation, provisions specifying appropriate enforcement 
procedures, a particular administering agency, and the 
standards, coverage, and exemptions, if any, to be in- 
cluded in the proposed enactment. 

Afpr >ved September 23, 1966. 



272 



ADDITIONAL PROVISIONS OF FAIR LABOR STANDARDS AMENDMENTS OF 1961 



[Public Law 87-30] 
[87th Congress] [1st Session] 

AN ACT 

To amend the Fair Labor Standards Act of 1938, as 
amended, to provide coverage for employees of large 
enterprises engaged in retail trade or service and of 
other employers engaged in commerce or in the produc- 
tion of goods for commerce, to increase the minimum 
wage under the Act to $1.25 an hour, and for other 
purposes. 

Be it enacted by the Senate and House of Representa- 
tives of the United States of America in Congress assem- 
bled, That this Act may be cited as the "Fair Labor 
Standards Amendments of 1961". 



[Sections 2 to 12, inclusive, of the Fair Labor Stand- 
ards Amendments of 1961 amend the Fair Labor 
Standards Act of 1938, and are incorporated in their 
proper place in the Act.] 

EFFECTIVE DATE 

Sec. 14. The amendments made by this Act shall 
take effect upon the expiration of one hundred and 
twenty days after the date of its enactment, except as 
otherwise provided in such amendments and except 
that the authority to promulgate necessary rules, reg- 
ulations, or orders with regard to amendments made 
by this Act, under the Fair Labor Standards Act of 
1938 and amendments thereto, including amendments 
made by this Act. may be exercised by the Secretary 
on and after the date of enactment of this Act. 

Approved May 5, 1961. 



- 273 - 



ADDITIONAL PROVISIONS OF FAIR LABOR STANDARDS AMENDMENTS OF 1949 

(63 Stat. 917) 



[Public Law 393 — 81st Congress] 
[Chapter 736— 1st Session] 

AN ACT 

To provide for the amendment of the Fair Labor Stand- 
ards Act of 1938, and for other purposes. 

Be it enacted by the Senate and House of Representa- 
tives of the United States of America in Congress assem- 
bled, That this Act may be cited as the "Fair Labor 
Standards Amendments of 1949". 

[Sections 2 to 15, inclusive, of the Fair Labor Stand- 
ards Amendments of 1949 amend the Fair Labor Stand- 
ards Act of 1938, and are incorporated in their proper 
place in the Act.] 

MISCELLANEOUS AND EFFECTIVE DATE 

Sec. 16. (a) The amendments made by this Act shall 
take effect upon the expiration of ninety days from the 
date of its enactment; except that the amendment 
made by section 4 shall take effect on the date of its 
enactment. 

(b) Except as provided in section 3(o) and in the last 
sentence of section 16(c) of the Fair Labor Standards 
Act of 1938, as amended, no amendment made by this 
Act shall be construed as amending, modifying, or 
renealing any provision of the Portal-to-Portal Act of 
1947. 

(c) Any order, regulation, or interpretation of the 
Administrator of the Wage and Hour Division or of the 
Secretary of Labor, and any agreement entered into by 
the Administrator or the Secretary, in effect under the 
provisions of the Fair Labor Standards Act of 1938, as 
amended, on the effective date of this Act, shall remain 
in effect as an order, regulation, interpretation, or 



agreement of the Administrator or the Secretary, as 
the case may be, pursuant to this Act, except to the 
extent that any such order, regulation, interpretation, 
or agreement may be inconsistent with the provisions 
of this Act, or may from time to time be amended, 
modified, or rescinded by the Administrator or the 
Secretary, as the case may be, in accordance with the 
provisions of this Act. ' 

(d) No amendment made by this Act shall affect any 
penalty or liability with respect to any act or omission 
occurring prior to the effective date of this Act; but, 
after the expiration of two years from such effective 
date, no action shall be instituted under section 16(b) of 
the Fair Labor Standards Act of 1938, as amended, with 
respect to any liability accruing thereunder for any act 
or omission occurring prior to the effective date of this 
Act. 

se) No employer shall be subject to any liability or 
punishment under the Fair Labor Standards Act of 
1938, as amended (in any action or proceeding com- 
menced prior to or on or after the effective date of this 
Act), on account of the failure of said employer to pay 
an employee compensation for any period of overtime 
work performed prior to July 20, 19 19, if the compensa- 
tion paid prior to July 20, 1949 for such work was at 
least equal to the compensation which would have been 
payable for such work had section 7(d) (6) and (7) and 
section 7(g) of the Fair Labor Standards Act of 1938, as 
amended, been in effect at the time of such payment. 

(f) Public Law 177, Eighty-first Congress, approved 
July 20, 1949, is hereby repealed as of the effective date 
of this Act. * 

Approved, October 26, 1949. 



Effective May 24, IfliiO. all functions c 
of I. ib,. r b\ Reorganization Plan No 6 of 
4(a< ol 'in Kair Labor Standaids Act 

■ The f.tovisions of the repealed statute 
It'ii. '7i. and ih'of the Kair Labor Standard' 



nistrutor were transferred to the Secretar 
i! Stat 12(>:i Sec 'ext set out under scitio 



med in substance i 



- 274 



PERTINENT PROVISIONS AFFECTING THE FAIR LABOR STANDARDS ACT FROM 
THE PORTAL-TO-PORTAL ACT OF 1947 



[Public Law 49— 80th Congress] 
[Chapter 52— 1st Session! 

[H.K.2157J 

AN ACT 

To relieve employers from certain liabilities and pun- 
ishments under tne Fair Labor Standards Act of 1938, 
as amended, the Walsh -Healey Act, and the Bacon- 
Davis Act, and for other purposes. 

Be it enacted by tlic Senate and House of Representa- 
tives of the United Slates of America in Congress assem- 
bled, 



PARTI 
FINDINGS AND POLICY 

Section 1. (a) The Congress hereby finds that the 
Fair Labor Standards Act of 1938, as amended, has 
been interpreted judicially in disregard of long-estab- 
lished customs, practices, and contracts between em- 
ployers and employees, thereby creating wholly unex- 
pected liabilities, immense in amount and retroactive 
in operation, upon employers with the results that, if 
said Act as so interpreted or claims arising under such 
interpretations were permitted to stand, (I) the pay- 
ment of such liabilities would bring about financial 
ruin of many employers and seriously impair the capi- 
tal resources of many others, thereby resulting in the 
reduction of industrial operations, halting of expansion 
and development, curtailing employment, and the 
earning power of employees; (2) the credit of many 
employers would be seriously impaired; (3) there would 
be created both an extended and continuous uncertain- 
ty on the part of industry, both employer and employ- 
ee, as to the financial condition of productive establish- 
ments and a gross inequality of competitive conditions 
between employers and between industries; (4) employ- 
ees would receive windfall payments, including liqui- 
dated damages, of sums for activities performed by 



them without any expectation of reward beyond that 
included in their agreed rates of pay; (5) there would 
occur the promotion of increasing demands for pay- 
ment to employees for engaging in activities no com- 
pensation for which had been contemplated by either 
the employer or employee at the time they were en 
gaged in; (ft) voluntary collective bargaining would be 
interfered with and industrial disputes be twee - em- 
ployees and employers and between employees and 
employees would be created; i7' the courts of the coun- 
try would be burdened with excessive and needless 
litigation and champertous practices would be encour- 
aged; (8) the Public Treasury would be deprived of large 
sums of revenues and public finances would be serious- 
ly deranged by claims against the Public Treasury for 
refunds of taxes already paid; (9) the cost to the Gov 
ernment of goods and services heretofore and hereafter 
purchased by its various departments and agencies 
would be unreasonably increased and the Public Treas- 
ury would be seriously affected by consequent in- 
creased cost of war contracts; and (10) serious and 
adverse effects upon the revenues of Federal, State, and 
local governments would occur. 

The Congress further finds that all of the foregoing 
constitutes a substantial burden on commerce and a 
substantial obstruction to the free flow of goods in 
commerce. 

The Congress, therefore, further finds and declares 
that it is in the national public interest. and for the 
general welfare, essential to national defense, and nec- 
essary to aid, protect, and foster commerce, that this 
Act be enacted. 

The Congress further finds that the varying and 
extended periods of time for which, under the laws of 
the several States, potential retroactive liability may 
be imposed upon employers, have given and will give 
rise to great difficulties in the sound and orderly con- 
duct of business and industry. 

The Congress further finds and declares that all of 
the results which have arisen or may arise under the 
Fair Labor Standards Act of 1938, as amended, as 
aforesaid, may (except as to liability for liquidated 
damages) arise with respect to the Walsh Healey and 



- 275 



Bacon-Davis Acts and that it is therefore, in the nation- 
al public interest and for the general welfare, essential 
to national defense, and necessary to aid, protect, and 
foster commerce, that this Act shall apply to the 
Walsh-Healey Act and the Bacon-Davis Act. 

lb) It is hereby declared to be the policy of the 
Congress in order to meet the existing emergency and 
to correct existing evils (1) to relieve and protect inter- 
state commerce from practices which burden and ob- 
struct it; <2> to protect the right of collective bargaining; 
and (3) to define and limit the jurisdiction of the courts. 



PART III 

FUTURE CLAIMS 

Sec. 4. Relief From Certain Future Claims Under 
the Fair Labor Standards Act of 1038, as Amended, 
the Walsh-Healey Act, and the Bacon-Davis Act.— 

(a) Except as provided in subsection (b), no employer 
shall be subject to any liability or punishment under 
the Fair Labor Standards Act of 1938, as amended, the 
Walsh-Healey Act, or the Bacon-Davis Act, on account 
of the failure of such employer to pay an employee 
minimum wages, or to pay an employee overtime com- 
pensation, for or on account of any of the following 
activities of such employee engaged in on or after the 
date of the enactment of this Act — 

(1) walking, riding, or traveling to and from the 
actual place of performance of the principal activity 
or activities which such employee is employed to 
perform, and 

(2) activities which are preliminary to or postlimin- 
ary to said principal activity or activities, 

which occur either prior to the time on any particular 
workday at which such employee commences, or subse- 
quent to the time on any particular workday at which 
he ceases, such principal activity or activities. 

(b) Notwithstanding the provisions of subsection (a) 
which relieve an employer from liability and punish- 
ment with respect to an activity, the employer shall not 
be so relieved if such activity is compensable by 
either— 

(1) an express provision of a written or nonwritten 
contract in effect, at the time of such activity, be- 
tween such employee, his agent, or collective-bar- 
gaining representative and his employer; or 

(2) a custom or practice in effect, at the time of 
such activity, at the establishment or other place 



where such employee is employed, covering such ac- 
tivity, not inconsistent with a written or nonwritten 
contract, in effect at the time of such activity, be- 
tween such employee, his agent, or collective-bar- 
gaining representative and his employer. 

(c) For the purposes of subsection (b), an activity shall 
be considered as compensable under such contract pro- 
vision or such custom or practice only when it is en- 
gaged in during the portion of the day with respect to 
which it is so made compensable. 

(d) In the application of the minimum wage and 
overtime compensation provisions of the Fair Labor 
Standards Act of 1938, as amended, of the Walsh- 
Healey Act, or of the Bacon-Davis Act, in determining 
the time for which an employer employs an employee 
with respect to walking, riding, traveling or other pre- 
liminary or postliminary activities described in subsec- 
tion (a) of this section, there shall be counted all that 
time, but only that time, during which the employee 
engages in any such activity which is compensable 
within the meaning of subsections (b) and (c> of this 
section. 

PART IV 

MISCELLANEOUS 



Sec. (i. Statute of Limitations.— Any action com- 
menced on or after the date of the enactment of this 
Act to enforce any cause of action for unpaid minimum 
wages, unpaid overtime compensation, or liquidated 
damages, under the Fair Labor Standards Act of 1938, 
as amended, the Walsh-Healey Act, or the Bacon-Davis 
Act- 
fa) if the cause of action accrues on or after the 
date of the enactment of this Act— may be com- 
menced within two years after the cause of action 
accrued, and every such action shall be forever 
barred unless commenced within two years after the 
cause of action accrued, except that a cause of action 
arising out of a willful violation may be commenced 
within three years after the cause of action accrued; ' 



(d) with respect to any cause of action brought under 
section 16(b) of the Fair Labor Standards Act of 1938 
against a State or a political subdivision of a State in a 



As aniendvd b> 



CiOl of the Fair Labor Standards Amendments of '.Wfi. 80 Stot 



276 



district court of the United States on or before April 18, 
1973, the running of the statutory periods of limitation 
shall be deemed suspended during the period beginning 
with the commencement of any such action and ending 
one hundred and eighty days after the effective date of 
the Fair Labor Standards Amendments of 1974, except 
that such suspension shall not be applicable if in such 
action judgment has been entered for the defendant on 
the grounds other than State immunity from Federal 
jurisdiction. 2 

Sec. 7. Determination of Commencement of 
Future Actions.— In determining when an action is 
commenced for the purposes of section 6, an action 
commenced on or after the date of the enactment of 
this Act under the Fair Labor Standards Act of 1938, as 
amended, the Walsh-Healey Act, or the Bacon-Davis 
Act, shall be considered to be commenced on the date 
when the complaint is filed; except that in the case of a 
collective or class action instituted under the Fair 
Labor Standards Act of 1938, as amended, or the Bacon- 
Davis Act, it shall be considered to be commenced in 
the case of any individual claimant — 

(a) on the date when the complaint is filed, if he is 
specifically named as a party plaintiff in the com- 
plaint and his written consent to become a party 
plaintiff is filed on such date in the court in which 
the action is brought; or 

(bj if such written consent was not so filed or if his 
name did not so appear— on the subsequent date on 
which such written consent is filed in the court in 
which the action was commenced. 



Sec. 10. Reliance in Future on Administrative 
Rulings, Etc.— 

(a) In any action or proceeding based on any act or 
omission on or after^the date of the enactment of this 
Act, no employer shall be subject to any liability or 
punishment for or on account of the failure of the 
employer to pay minimum wages or overtime compen- 
sation under the Fair Labor Standards Act of 1938, as 
amended, the Walsh-Healey Act, or the Bacon-Davis 
Act, if he pleads and proves that the act or omission 
complained of was in good faith in conformity with and 
in reliance on any written administrative regulation, 
order, ruling, approval, or interpretation, of the agency 
of the United States specified in subsection (b) of this 
section, or any administrative practice or enforcement 
policy of such agency with respect to the class of em- 



ployers to which he belonged. Such a defense, if estab- 
lished, shall be a bar to the action or proceeding, 
notwithstanding that after such act or omission, such 
administrative regulation, order, ruling, approval, in- 
terpretation, practice, or enforcement policy is modi- 
fied or rescinded or is determined by judicial authority 
to be invalid or of no legal effect. 

(b) The agency referred to in subsection (a) shall be — 
(1) in the case of the Fair Labor Standards Act of 

1938, as amended — the Secretary of Labor 3 ; 



***** 



Sec. 11. Liquidated Damages.— In any action com- 
menced prior to or on or after the date of the enact- 
ment of this Act to recover unpaid minimum wages, 
unpaid overtime compensation, or liquidated damages, 
under the Fair Labor Standards Act of 1938, as amend- 
ed, if the employer shows to the satisfaction of the 
court that the act or omission giving rise to such action 
was in good faith and that he had reasonable grounds 
for believing that his act or omission was not a viola- 
tion of the Fair Labor Standards Act of 1938, as amend- 
ed, the court may, in its sound discretion, award no 
liquidated damages or award any amount thereof not 
to exceed the amount specified in section 16 4 of such 
Act. 



Sec. 13. Definitions.— 

(a) When the terms "employer", "employee", and 
"wage" are used in this Act in relation to the Fair 
Labor Standards Act of 1938, as amended, they shall 
have the same meaning as when used in such Act of 
1938. 



(e) As used in section 6 of the term "State" means any 
State of the United States or the District of Columbia 
or any Territory or possession of the United States 

Sec. 14. Separability. — If any provision of this Act 
or the application of such provision to any person or 
circumstance is held invalid, the remainder of this Act 
and the application of such provision to other persons 
or circumstances shall not be affected thereby. 

Sec. 15. Short Title. — This Act may be cited as the 
"Portal-to-Portal Act of 1947". 

Approved May 14, 1947. 



Addi-d hv t he Fl 



nrfurds Amendn 



277 



ADDITIONAL PROVISIONS OF EQUAL PAY ACT OF 1963 



[Public Law 88-38] 

[88th Congress, S. 1409] 

[June 10, 19631 

AN ACT 

To prohibit discrimination on account of sex in the 
payment of wages by employers engaged in commerce 
or in the production of goods for commerce. 

Be it enacted by the Senate and House of Representa- 
tives of the United States of America in Congress assem- 
bled, That this Act may be cited as the "Equal Pay Act 
of 1963". 



DECLARATION OF PURPOSE 

Sec. 2. (a) The Congress hereby finds that the exis- 
tence in industries engaged in commerce or in the 
production of goods for commerce of wage differentials 
based on sex — 

(1) depresses wages and living standards for em- 
ployees necessary for their health and efficiency; 

(2) prevents the maximum utilization of the availa- 
ble labor resources; 

(3) tends to cause labor disputes, thereby burden- 
ing, affecting, and obstructing commerce; 



(4) burdens commerce and the free flow of goods in 
commerce; and 

(5) constitutes an unfair method of competition, 
(b) It is hereby declared to be the policy of this Act, 

through exercise by Congress of its power to regulate 
commerce among the several States and with foreign 
nations, to correct the conditions above referred to in 
such industries. 

[Section 3 of the Equal Pay Act of 1963 amends 
section 6 of the Fair Labor Standards Act by adding a 
new subsection (d). The amendment is incorporated in 
the revised text of the Act.] 

EFFECTIVE DATE 

Sec. 4. The amendments made by this Act shall take 
effect upon the expiration of one year from the date of 
its enactment: Provided, That in the case of employees 
covered by a bona fide collective bargaining agreement 
in effect at least thirty days prior to the date of enact- 
ment of this Act, entered into by a labor organization 
(as defined in section 6(d)(4) of the Fair Labor Stand- 
ards Act of 1938, as amended), the amendments made 
by this Act shall take effect upon the termination of 
such collective bargaining agreement or upon the expi- 
ration of two years from the date of enactment of this 
Act, whichever shall first occur. 

Approved June 10, 1963, 12 m. 



U. S. GOVERNMENT PRINTING OFFICE 



278 - 



DAVIS-BACON ACT 

[Public— No. 403— 74th Congress] 
[S. 3303] 



To amend the Act approved March 3, 1931, relating to the rate of wages for laborers and mechanics employed by 
contractors and subcontractors on public buildings. 



Be, it enacted by the, Senate and House of Rep- 
resentatives of the United States of America in 
Congress assembled, That the Act entitled "An Act 
relating to the rate of wages for laborers and 
mechanics employed on public buildings of the 
United States and the District of Columbia by con- 
tractors or subcontractors, and for other purposes," 
approved March 3, 1931, is amended to read as 
follows : 

"That the advertised specifications for every con- 
tract in excess of $2,000, to which the United 
States or the District of Columbia is a party, 
for construction, alteration, and/or repair, in- 
cluding painting and decorating, of public build- 
ings or public works of the United States or the 
District of Columbia within the geographical 
limits of the States of the Union or the District 
of Columbia, and which requires or involves the 
employment of mechanics and/or laborers shall 
contain a provision stating the minimum wages to 
be paid various classes of laborers and mechanics 
which shall be based upon the wages that will be 
determined by the Secretary of Labor to be pre- 
vailing for the corresponding classes of laborers 
and mechanics employed on projects of a character 
similar to the contract work in the city, town, vil- 
lage, or other civil subdivision of the Slate in 
which the work is to be performed, or in the Dis- 
trict of Columbia if the work is to be performed 
there: and every contract based upon these speci- 
fications shall contain a stipulation that the con- 
tractor or his subcontractor shall pay all mechanics 
and laborers employed directly upon the site of 
the work, unconditionally and not less often than 
once a week, and without subsequent deduction or 
rebate on any account, the full amounts accrued at 
time of payment, computed at wage rates not less 
than those stated in the advertised specifications, 
regardless of any contractual relationship which 



may be alleged to exist between the contractor or 
subcontractor and such laborers and mechanics, 
and that the scale of wages to be paid shall be 
posted by the contractor in a prominent and easily 
accessible place at the site of the work; and the 
further stipulation that there may be withheld 
from the contractor so much of accrued payments 
as may be considered necessary by the contracting 
officer to pay to laborers and mechanics employed 
by the contractor or any subcontractor on the work 
the difference between the rates of wages required 
by the contract to be paid laborers and mechanics 
on the work and the rates of wages received by 
such laborers and mechanics and not refunded to 
the contractor, subcontractors, or their agents. 

"Sec. 2. Every contract within the scope of this 
Act shall contain the further provision that in the 
event it is found by the contracting officer that 
any laborer or mechanic employed by the con- 
tractor or any subcontractor directly on the site 
of the work covered by the contract has been or 
is being paid a rate of wages less than the rate 
of wages required by the contract to be paid as 
aforesaid, the Government may, by written notice 
to the contractor, terminate his right to proceed 
with the work or such part of the work as to which 
there has been a failure to pay said required wages 
and to prosecute the work to completion by con- 
tract or otherwise, and the contractor and his 
sureties shall be liable to the Government for any 
excess costs occasioned the Government thereby. 

"Sec. 3. (a) The Comptroller General of the 
United States is hereby authorized and directed 
to pay directly to laborers and mechanics from any 
accrued payments withheld under the terms of 
the contract any wages found to be due laborers 
and mechanics pursuant to this Act; and the 
Comptroller General of the United States is 
further authorized and is directed to distribute 



- 279 



a list to all departments of the Government giv- 
ing the names of persons or firms whom he has 
found to have disregarded their obligations to 
employees and subcontractors. No contract shall 
be awarded to the jiersons or firms appearing on 
this list or to any firm, corporation, partnership, 
or association in which such persons or firms have 
an interest until three years have elapsed from the 
date of publication of the list containing the names 
of such persons or firms. 

"(b) If the accrued payments withheld under 
the terms of the contract, as aforesaid, are insuf- 
ficient to reimburse all the lal>orers and mechanics 
with respect, to whom there has l>een a failure to 
pay the wages required pursuant to this Act, such 
laborers and mechanics shall have the right of 
a action and /or of intervention against the con- 
tractor and his sureties conferred by law upon 
persons, furnishing labor or materials, and in 
such proceedings it shall l>e no defense that such 
laborers and mechanics accepted or agreed to 
accept less than the required rate of wages or 
voluntarily made refunds. 



"Sec. 4. This Act shall not be construed to super- 
sede or impair any authority otherwise granted 
by Federal law to provide for the establishment 
of specific wage rates. 

"Sec. 5. This Act shall take effect thirty days 
after its passage, but shall not affect any contract 
then existing or any contract that may thereafter 
be entered into pursuant to invitations for bids 
that are outstanding at the time of the passage of 
this Act. 

"Sec. 6. In the event of a national emergency 
the President is authorized to suspend the pro- 
visions of this Act. 

"Sec. 7. The funds appropriated and made 
available by the Emergency Relief Appropriation 
Act of 1935 (Public Resolution Numbered 11, 
74th Congress), are hereby made available for the 
fiscal year ending June 30, 1936, to the Depart- 
ment of Labor for expenses of the administration 
of this Act." 

Approved, August 30, 1935. 



AMENDMENT 

[Public— No. 633— 76th Congress] 

[Chapter 373— 3d Session] 

[S. 3650] 



To require the payment of prevailing rates of wages 

Re it enacted by the Senate and House of Rep- 
resentative* of the United States of America in 
Congress a.sse?nbl-ed, That section 1 of the Act en- 
titled "An Act relating to the rate of wages for 
laborers and mechanics employed on public build- 
ings of the United States and the District of 
Columbia by contractors and subcontractors, and 
for other purposes," approved March 3, 1931 (46 
Stat, 14!>4), as amended, is further amended by 
striking out the words "States of the Union or 
the District of Columbia" and inserting in lieu 
thereof "States of the Union, the Territory of 
Alaska, the Territory of Hawaii, or the District 
of Columbia"; and by striking out the words "or 
other civil subdivision of the State" 1 and insert- 
ing in lieu thereof "or other civil subdivision of 
the State, or the Territory of Alaska or the Ter- 
ritory of Hawaii". 



on Federal public works in Alaska and Hawaii. 

Sec. 2. The amendments made by this Act shall 
take effect on the thirtieth day after the date of 
enactment of this Act, but shall not affect any 
contract in existence on such effective date or made 
thereafter pursuant to invitations for bids out- 
standing on the date of enactment of this Act. 

Approved, June 15, 1940. 

[40 U. S. Code, sec. 276a-7] 

The fact that any contract authorized by any 
Act is entered into without regard to section 5 
of Title 41, or upon a cost-plus-a-fixed-fee basis 
or otherwise without advertising for proposals, 
shall not be construed to render inapplicable the 
provisions of sections 276a to 276a-5 of this title, 
if c uch Act would otherwise be applicable to such 
contract. March 23, 1941, 12 noon, eh. 26, 55 Stat. 
5o , Aug. 21, 1941, ch. 395, 55 Stat. 658. 



280 



AMENDMENT 

[Public— No. 88-349 — 88th Congress] 
July 2, 1964 
[H.R. 6041] 

AN ACT 



To amend the prevailing wage section of the Davis-Bacon Act, as amended; and related sections of the Federal Airport 
Act, as amended ; and the National Housing Act, as amended. 

Re it enacted bu the Senate and House of Representatives of the United States of America in Congress Federal con- 

amended; 40 U.S.C. '^T^bore™". 



assembled. That section 1 of the Act of March 3, 1931, as amended (46 Stat. 1404, a 

iguage 
adding at the end thereof the following new subsection (b) 



276a), is hereby amended by designating the language of the present section as subsection (a) and by Fringe 

benefits 



"(b) As used in this Act the term 'wages', 'scale of wages', 'wage rates', 'minimum wages', and 
'prevailing wages' shall include — 

"(1) the basic hourly rate of pay; and 
"(2) the amount of — 

"(A) the rate of contribution irrevocably made by a contractor or subcontractor to a 
trustee or to a third person pursuant to a fund, plan, or program ; and 

"(B) the rate of costs to the contractor or sul>contractor which may be reasonably 
anticipated in providing benefits to laborers and mechanics pursuant to an enforcible commit- 
ment to carry out a financially resjKmsible plan or program which was communicated in 
writing to the laborers and mechanics affected, 
for medical or hospital care, pensions on retirement or death, comi>ensation for injuries or illness 
resulting from occupational activity, or insurance to provide any of the foregoing, for unem- 
ployment benefits, life insurance, disability and sickness insurance, or accident insurance, for 
vacation and holiday pay. for defraying costs of apprenticeship or other similar programs, or 
for other bona fide fringe benefits, but only where the contractor or subcontractor is not required 
by other Federal, State, or local law to provide any such benefits: 
Provided, That I he obligation of a contractor or subcontractor to make payment in accordance with the 
prevailing wage determinations of the Secretary of Labor, insofar as this Act and other Acts incorpo- 
rating this Aci by reference are concerned may be discharged by the making of payments in cash, by the 
making of contributions of a type referred to in i>aragraph (2) (A), or by the assumption of an enforcible 
commitment to bear the costs of a plan or program of a type referred to in paragraph (2) (B), or any 
combination thereof, where the aggregate of any such payments, contributions, and costs is not less than 
the rate of pay descriUnl in paragraph (1) plus the amount referred to in paragraph (2). 

"In determining the overtime pay to which the laborer or mechanic is entitled under any Federal 
law, his regular or basic hourly rate of pay (or other alternative rate ui>on which premium rate of 
overtime comi>ensarioi) is computed) shall l>e deemed to be the rate computed under jwragraph (1), 
except that where the amount of payments, contributions, or costs incurred with respect to him exceeds 
the prevailing wage applicable to him under this Act. such regular or basic hourly rate of pay (or such 
other alternative rate) shall l>e arrived at by deducting from the amount of payments, contributions, or 
costs actually incurred with respect to him, the amount of contributions or costs of the types described 
in paragraph (2) actually incurred with respect to him, or the amount determined under paragraph (2) 
but not actually paid, whichever amount is the greater." 

Sec. 2. Section 15(b) of the Federal Airport Act. as amended (60 Stat. 17K. as amended; 40 U.S.C. 
1114(b)), is hereby amended by inserting the words "in accordance with the Davis-Bacon Act, as 
amended (40 U.S.C. 276a— 276a-5 ) " after the words "Secretary of Labor,". 

Sec. 3. Section 212(a) of the National Housing Act, as amended (53 Stat. 208, as amended; 12 U.S.C. 
1715(c) ), is hereby amended by inserting the words "in accordance with the Davis-Bacon Act, as amended 
(40 U.S.C. 276a— 27C»a-5)," after the words "Secretary of Labor.". 

Sec. 4. The amendments made by this Act. shall take effect on the ninetieth day after the date of 
enactment of this Act, but shall not affect any contract in existence on such effective date or made there- 
after pursuant to invitations for bids outstanding on such effective date and the rate of payments specified 
by section 1(b)(2) of the Act of March 3, 1931, as amended by this Act, shall, during a i>eriod of two 
hundred and seventy days after such effective date, become effective only in those cases and reasonable 
classes of cases as the Secretary of Labor, acting as rapidly as practicable to make such rates of payments 
fully effective, shall by rule or regulation provide. 



49 Stat. 1011. 



Benefit costs. 



Payor obliga- 
tions, method 
of payment. 



Overtime pay 
computation, 
exclusion of 
benefit costs. 



Airport 
projects. 
63 Stat. 480. 
49 Stat. 1011. 
Housing 
projects. 
53 Stat. 807 ; 
73 Stat. 667. 
12 USC 1715c. 
Effective date. 
78 STAT. 239. 
78 STAT. 240. 



* 



281 



U.S. GOVERNMENT PRINTING OFFICE: 1968 O — 314-639 
SPO 893-428 



TITLE 29 C\ 

SUBTITLE A -< 

REGULATIONS PART tJ 

OF THE CODE OF FEDERAL REGULATIONS 



PAYMENT AND REPORTING OF WAGES 



CONTRACTORS AND SUBCONTRACTORS ON PUBLIC 
BUILDING AND PUBLIC WORK AND ON BUILDING 
AND WORK FINANCED IN WHOLE OR IN PART BY 
LOANS OR GRANTS FROM THE UNITED STATES 



[This publication conforms to the Code of Federal Regulations as 
of January 17, 1973, the date this reprint was authorized.] 




UNITED STATES DEPARTMENT OF LABOR 
Employment Standards Administration 
Wage and Hour Division 

WASHINGTON, D.C. 20210 



WH Publication 1243 Rev. 

- 282 



Title 29— LABOR 

Subtitle A — Office of the Secretary of Labor 

PART 3— CONTRACTORS AND SUBCONTRACTORS ON PUBLIC 
BUILDING OR PUBLIC WORK FINANCED IN WHOLE OR IN 
PART BY LOANS OR GRANTS FROM THE UNITED STATES 

Sec. 

3.1 Purpose and scope. 

3.2 Definitions. 

3.3 Weekly statement with respect to payment of wages. 

3.4 Submission of weekly statements and the preservation and inspection of weekly 

payroll records. 

3.5 Payroll deductions permissible without application to or approval of the Secretary 

of Labor. 

3.6 Payroll deductions permissible with the approval of the Secretary of Labor. 

3.7 Applications for the approval of the Secretary of Labor. 

3.8 Action by the Secretary of Labor upon applications. 

3.9 Prohibited payroll deductions. 

3.10 Methods of payment of wages. 

3.11 Regulations part of contract. 

Authority : The provisions of this Part 3 issued under R.S. 161, sec. 2, 48 Stat. 848; 
Reorg. Plan No. 14 of 1950, 64 Stat 1267 ; 5 U.S.G. 301, 133z-15 note ; 40 U.S.C. 276c. 

Soubce: The provisions of this Part 3 appear at 29 F.R. 97, Jan. 4, 1964, unless other- 
wise noted. 



- 283 



Title 29— Labor 

Subtitle A — Office of the Secretary of Labor 



PART 3— CONTRACTORS AND SUBCON- 
TRACTORS ON PUBLIC BUILDING OR 
PUBLIC WORK FINANCED IN WHOLE 
OR IN PART BY LOANS OR GRANTS 
FROM THE UNITED STATES 

Section 3.1 Purpose and scope. 

This ,part prescribes "anti-kickback" regula- 
tions under section 2 of the Act of June 13, 1934, 
as amended (40 U.S.C. 276c), popularly known 
as the Copeland Act. This part applies to any 
contract which is subject to Federal wage stand- 
ards and which is for the construction, prosecu- 
tion, completion, or repair of public buildings, 
public works or buildings or works financed in 
whole or in part by loans or grants from the 
United States. The part is intended to aid in the 
enforcement of the minimum wage provisions of 
the Davis-Bacon Act and the various statutes deal- 
ing with Federally-assisted construction that con- 
tain similar minimum wage provisions, including 
those provisions which are not subject to Reorga- 
nization Plan No. 14 (e.g., the College Housing 
Act of 1950, the Federal Water Pollution Con- 
trol Act, and the Housing Act of 1959), and in the 
enforcement of the overtime provisions of the 
Contract Work Hours and Safety Standards Act 
whenever they are applicable to construction work. 
The part details the obligation of contractors and 
subcontractors relative to the weekly submission of 
statements regarding the wages paid on work 
covered thereby ; sets forth the circumstances and 
procedures governing the making of payroll 
deductions from the wages of those employed on 
such work; and delineates the methods of pay- 
ment permissible on such work. 
Section 3.2 Definitions. 

As used in the regulations in this part: 
(a) The terms "building'' or "work" generally 
include construction activity as distinguished 
from manufacturing, furnishing of materials, or 



servicing and maintenance work. The terms in- 
clude, without limitation, buildings, structures, 
and improvements of all types, such as bridges, 
dams, plants, highways, parkways, streets, sub- 
ways, tunnels, sewers, mains, powerlines, pump- 
ing stations, railways, airports, terminals, docks, 
piers, wharves, ways, lighthouses, buoys, jetties, 
breakwaters, levees, and canals ; dredging, shoring, 
scaffolding, drilling, blasting, excavating, clear- 
ing, and landscaping. Unless conducted in connec- 
tion with and at the site of such a building or work 
as is described in the foregoing sentence, the 
manufacture or furnishing of materials, articles, 
supplies, or equipment (whether or not a Federal 
or State agency acquires title to such materials, 
articles, supplies, or equipment during the course 
of the manufacture or furnishing, or owns the 
materials from which they are manufactured or 
furnished) is not a "building" or "work" within 
the meaning of the regulations in this part. 

(b) The terms "construction," "prosecution," 
"completion," or "repair" mean all types of work 
done on a particular building or work at the site 
thereof, including, without limitation, altering, re- 
modeling, painting and decorating, the transport- 
ing of materials and supplies to or from the build- 
ing or work by the employees of the construction 
contractor or construction subcontractor, and the 
manufacturing or furnishing of materials, arti- 
cles, supplies, or equipment on the site of the build- 
ing or work, by persons employed at the site by 
the contractor or subcontractor. 

(c) The terms "public building" or "public 
work" include building or work for whose con- 
struction, prosecution, completion, or repair, as 
defined above, a Federal agency is a contracting 
party, regardless of whether title thereof is in 
a Federal agency. 

(d) The term "building or work financed in 
whole or in part by loans or grants from the 
United States" includes building or work for 
whose construction, prosecution, completion, or 



284 - 



repair, as defined above, payment or part pay- 
ment is made directly or indirectly from funds 
provided by loans or grants by a Federal agency. 
The term does not include building or work for 
which Federal assistance is limited solely to loan 
guarantees or insurance. 

(e) Every person paid by a contractor or sub- 
contractor in any manner for his labor in the con- 
struction, prosecution, completion, or repair of a 
public building or public work or building or 
work financed in whole or in part by loans or 
grants from the United States is "employed'" and 
receiving "wages," regardless of any contractual 
relationship alleged to exist between him and the 
real employer. 

(f ) The term "any affiliated person" includes a 
Spouse, child, parent, or other close relative of the 
contractor or subcontractor ; a partner or officer of 
the contractor or subcontractor; a corporation 
closely connected with the contractor or subcon- 
tractor as parent, subsidiary or otherwise, and an 
officer or agent of such corporation. 

(g) The term "Federal agency" means the 
United States, the District of Columbia, and all 
executive departments, independent establish- 
ments, administrative agencies, and instrumen- 
talities of the United States and of the District of 
Columbia, including corporations, all or substan- 
tially all of the stock of which is beneficially owned 
by the United States, by the District of Columbia, 
or any of the foregoing departments, establish- 
ments, agencies, and instrumentalities. 

Section 3.3 Weekly statement with respect to 
payment of wages. 

(a) As used in this section, the term "employee" 
shall not apply to persons in classifications higher 
than that of laborer or mechanic and those who 
are the immediate supervisors of such employees. 

(b) Each contractor or subcontractor engaged 
in the construction, prosecution, completion, or 
repair of any public building or public work, or 
building or work financed in whole or in part by 
loans or grants from the United States, shall fur- 
nish each week a statement with respect to the 
wages paid each of its employees engaged on work 
covered by this part 3 and 5 of this subtitle during 
the preceding weekly payroll period. This state- 
ment shall be executed by the contractor or subcon- 
tractor or by an authorized officer or employee of 



the contractor or subcontractor who supervises the 
payment of wages, and shall be on form WH 348, 
"Statement of Compliance", or on an identical 
form on the back of WH 347, "Payroll (For Con- 
tractors Optional Use) " or on any form with iden- 
tical wording. Sample copies of WH 347 and 
WH 348 may be obtained from the Government 
contracting or sponsoring agency, and copies of 
these forms may be purchased at the Government 
Printing Office. 

(c) The requirements of this section shall not 
apply to any contract of $2,000 or less. 

(d) Upon a written finding by the head of a 
Federal agency, the Secretary of Labor may pro- 
vide reasonable limitations, variations, tolerances, 
and exemptions from the requirements of this sec- 
tion subject to such conditions as the Secretary 
of Labor may specify. 

[29 F.R. 97, Jan. 4, 1964, as amended at 33 F.R. 10186, 
July 17, 1968] 

Section 3.4 Submission of weekly statements 
and the preservation and inspection of 
weekly payroll records. 

(a) Each weekly statement required under § 3.3 
shall be delivered by the contractor or subcontrac- 
tor, within seven days after the regular payment 
date of the payroll period, to a representative of a 
Federal or State agency in charge at the site of the 
building or work, or, if there is no representative 
of a Federal or State agency at the site of the 
building or work, the statement shall be mailed 
by the contractor or subcontractor, within such 
time, to a Federal or State agency contracting for 
or financing the building or work. After such ex- 
amination and check as may be made, such state- 
ment, or a copy thereof, shall be kept available, or 
shall be transmitted together with a report of any 
violation, in accordance with applicable procedures 
prescribed by the United States Department of 
Labor. 

(b) Each contractor or subcontractor shall 
preserve his weekly payroll records for a period of 
three years from date of completion of the con- 
tract. The payroll records shall set out accurately 
and completely the name and address of each la- 
borer and mechanic, his correct classification, rate 
of pay, daily and weekly number of hours worked, 
deductions made, and actual wages paid. Such 
payroll records shall be made available at all times 



-285 - 



for inspection by the contracting officer or his 
authorized representative, and by authorized rep- 
resentatives of the Department of Labor. 

Section 3.5 Payroll deductions permissible 
without application to or approval of the 
Secretary of Labor. 

Deductions made under the circumstances or in 
the situations descril>ed in the paragraphs of this 
section may lx> made without application to and 
approval of the Secretary of Labor : 

(a) Any deduction made in compliance with 
the requirements of Federal, State, or local law, 
such as Federal or State withholding income taxes 
and Federal social security taxes. 

(b) Any deduction of sums previously paid to 
the employee as a bona fide prepayment of wages 
when such prepayment is made without discount 
or interest. A "bona fide prepayment of wages" is 
considered to have been made only when cash or 
its equivalent nas been advanced to the person em- 
ployed in such manner as to give him complete 
freedom of disposition of the advanced funds. 

(c) Any deduction of amounts required by 
court process to l>e paid to another, unless, the de- 
duction is in favor of the contractor, sulx-ontractor 
or any affiliated person, or when collusion or col- 
laboration exists. 

(d) Any deduction constituting a contribution 
on behalf of the person employed to funds estab- 
lished by the employer or representatives of em- 
ployees, or both, for the purpose of providing 
either from principal or income, or both, medical 
or hospital care, pensions or annuities on retire- 
ment, death benefits, compensation for injuries, 
illness, accidents, sickness, or disability, or for 
insurance to provide any of the foregoing, or 
unemployment benefits, vacation pay, savings ac- 
counts, or similar payments for the benefit of em- 
ployees, their families and dependents: Provided, 
however, That the following standards are met : 
(1) The deduction is not otherwise prohibited In- 
law; (2) it is either: (i) Voluntarily consented 
to by the employee in writing and in advance of 
the period in which the work is to be done and such 
consent is not a condition either for the obtaining 
of or for the continuation of employment, or (ii) 
provided for in a bona fide collective bargaining 
agreement between the contractor or subcontrac- 
tor and representatives of its employees; (3) no 
profit or other benefit is otherwise obtained, di- 



rectly or indirectly, by the contractor or subcon- 
tractor or any affiliated person in the form of 
commission, dividend, or otherwise; and (4) the 
deductions shall serve the convenience and interest 
of the employee. 

(e) Any deduction contributing toward the 
purchase of United States Defense Stamps and 
Bonds when voluntarily authorized by the 
employee. 

(f ) Any deduction requested by the employee to 
enable him to repay loans to or to purchase shares 
in credit unions organized and operated in accord- 
ance with Federal and State credit union statutes. 

(g) Any deduction voluntarily authorized by 
the employee for the making of contributions to 
governmental or quasi-governmental agencies, 
such as the American Red Cross. 

(h) Any deduction voluntarily authorized by 
the employee for the making of contributions to 
Community Chests, United Givers Funds, and 
similiar charitable organizations. 

(i) Any deductions to pay regular union initia- 
tion fees and membership dues, not including fines 
or special assessments: Provided, however, That a 
collective bargaining agreement between the con- 
tractor or subcontractor and representatives of its 
employees provides for such deductions and the 
deductions are not otherwise prohibited by law. 

(j) Any deduction not more than for the "rea- 
sonable cost" of board, lodging, or other facilities 
meeting the requirements of section 3(m) of the 
Fair Labor Standards Act of 1938, as amended, 
and Part 531 of this title. When such a deduction 
is made the additional records required under 
§ 516.27(a) of this title shall be kept, 

(k) Any deduction for the cost of safety 
equipment of nominal value purchased by the 
employee as his own property for his personal pro- 
tection in his work, such as safety shoes, safety 
glasses, safety gloves, and hard hats, if such equip- 
ment is not required by law to be furnished by the 
employer, if such deduction is not violative of the 
Fair Labor Standards Act or prohibited by other 
law, if the cost on which the deduction is based 
does not exceed the actual cost to the employer 
where the equipment is purchased from him and 
does not include any direct or indirect monetary 
return to the employer where the equipment is 
purchased from a third person, and if the deduc- 
tion is either (1) voluntarily consented to by the 
employee in writing and in advance of the period 



-286 



in which the work is to be done and such consent 
is not a condition either for the obtaining of 
employment or its continuance; or (2) provided 
for in a bona fide collective bargaining agreement 
between the contractor or subcontractor and repre- 
sentatives of its employees. 

[29 F.R. 97, Jan. 4, 1964, as amended at 36 F.R. 9770, 
May 28, 1971] 

Section 3.6 Payroll deductions permissible 
with the approval of the Secretary of 
Labor. 

Any contractor or subcontractor may apply to 
the Secretary of Labor for permission to make any 
deduction not permitted under § 3.5. The Secretary 
may grant permission whenever he finds that: 

(a) The contractor, subcontractor, or any af- 
filiated person does not make a profit or benefit 
directly or indirectly from the deduction either 
in the form of a commission, dividend, or other- 
wise ; 

(b) The deduction is not otherwise prohibited 
by law; 

(c) The deduction is either (1) voluntarily con- 
sented to by the employee in writing and in ad- 
vance of the period in which the work is to be done 
and such consent is not a condition either for the 
obtaining of employment or its continuance, or 
(2) provided for in a bona fide collective bargain- 
ing agreement between the contractor or subcon- 
tractor and representatives of its employees; and 

(d) The deduction serves the convenience and 
interest of the employee. 

Section 3.7 Applications for the approval of 
the Secretary of Labor. 

Any application for the making of payroll de- 
ductions under § 3.6 shall comply with the require 
ments prescribed in the following paragraphs of 
this section: 

(a) The application shall be in writing and shall 
be addressed to the Secretary of Labor. 

(b) The application need not identify the 
contract or contracts under which the work in ques- 
tion is to be performed. Pel-mission will be given 
for deductions on all current and future contracts 
of the applicant for a period of 1 year. A renewal 
of permission to make such payroll deduction will 
be granted upon the submission of an application 
which makes reference to the original application, 
recites the date of the Secretary of Labor's ap- 
proval of such deductions, states affirmatively that 



there is continued compliance with the standards 
set forth in the provisions of § 3.6, and specifies 
any conditions which have changed in regard to 
the payroll deductions. 

(c) The application shall state affirmatively that 
there is compliance with the standards set forth 
in the provisions of § 3.6. The affirmation shall be 
accompanied by a full statement of the facts in- 
dicating such compliance. 

(d) The application shall include a description 
of the proposed deduction, the purpose to be served 
thereby, and the classes of laborers or mechanics 
from whose wages the proposed deduction would 
be made. 

(e) The application shall state the name and 
business of any third person to whom any funds 
obtained from the proposed deductions are to be 
transmitted and the affiliation of such person, if 
any, with the applicant. 

[29 F.R. 97, Jan. 4, 1964, as amended at 36 F.R. 9771, 
May 28, 1971] 

Section 3.8 Action by the Secretary of Labor 
upon applications. 

The Secretary of Labor shall decide whether 
or not the requested deduction is permissible under 
provisions of § 3.6; and shall notify the applicant 
in writing of his.decision. 

Section 3.9 Prohibited payroll deductions. 

Deductions not elsewhere provided for by this 
part and which are not found to be permissible 
under § 3.6 are prohibited. 

Section 3.10 Methods of payment of wages. 

The payment of wages shall be by cash, negoti- 
able instruments payable on demand, or the addi- 
tional forms of compensation for which deductions 
are permissible under this part. No other methods 
of payment shall be recognized on work subject 
to the Copeland Act. 

Section 3.11 Regulations part of contract. 

All contracts made with respect to the construc- 
tion, prosecution, completion, or repair of any 
public building or public work or building or work 
financed in whole or in part by loans or grants 
from the United States covered by the regulations 
in this part shall expressly bind the contractor or 
subcontractor to comply with such of the regula- 
tions in this part as may be applicable. In this 
regard, see 8 5.5(a) of this subtitle. 



287 



"ANTI-KICKBACK" ACT, COPELAND 
ACT 

TITLE 18, U.S.C. 

§ 874- Kickbacks from public works employees : 

"Whoever, by force, intimidation, or threat of 
procuring dismissal from employment, or by any 
other manner whatsoever induces any person em- 
ployed in the construction, prosecution, comple- 
tion or repair of any public building, public 
work, or building or work financed in whole or 
in part by loans or grants from the United States, 
to give up any part of the compensation to which 
he is entitled under his contract of employment, 
shall be fined not more than $5,000 or imprisoned 
not more than five years, or both." 

[18 UjS.C. 874 (June 25, 1948, ch. 645, § 1, 62 
Stat. 740, eff. Sept. 1, 1948) replaces the former 
§ 1 of the Copeland Act of June 13, 1934 (48 
Stat. 948), which was codified as 40 U.S.C. 276b 
prior to its repeal by 62 Stat. 862, eff. Sept. 1, 
1948] 

TITLE 40, U.S.C. (as amended) 

§ 276c. Regulations governing contractors and 
subcontractors : 

"The Secretary of Labor shall make reasonable 
regulations for contractors and subcontractors en- 
gaged in the construction, prosecution, completion 
or repair of public buildings, public works or 



buildings or works financed in whole or in part 
by loans or grants from the United States, in- 
cluding a provision that each contractor and sub- 
contractor shall furnish weekly a statement with 
respect to the wages paid each employee during 
the preceding week. Section 1001 of Title 18 of 
the United States Code (Criminal Code and 
Criminal Procedure) shall apply to such state- 
ments." 

[40 UJS.C. °276c. a« amended (48 Stat. 948, as 
amended by 62 Stat. 862, 63 Stat. 108, and 72 
Stat. 967) constitutes the Copeland Act in its 
present form, which is a revision of section 2 of 
the original Act of June 13, 1934, section 1 of the 
original Act was repealed coincident ally with its 
replacement by IS I'.S.C S74, set out above.] 

Reorganization Plan Xo. 14 of 1950 ( 15 F.R. 3l7C>, 
64 Stat, 1267, 5 U.S.C. A. APPX.): 

"In order to assure coordination of administra- 
tion and consistency of enforcement of the labor 
standards provision of each of the [foregoing 
and other enumerated] Acts by the Federal agen- 
cies responsible for the administration thereof, 
the Secretary of Labor shall prescribe appropriate 
standards, regulations, and procedures, which 
shall be observed by these agencies, and cause to 
be made by the Department of Labor such in- 
vestigations, with respect to compliance with and 
enforcement of such labor standards, as he deems 
desirable, . . ." 



U.S. GOVERNMENT PRINTING OFFICE : 1973 0-494-575 



- 288 



<• 



Regulations, Part 5: 
Labor Standards Provisions 
Applicable to Contracts Covering 
Federally Financed and 
Assisted Construction 




Title 29, Part 5 of the 
Code of Federal Regulations 

U.S. Department of Labor 
Employment Standards Administration 
Wage and Hour Division 

WH Publication 1244 
(Revised April 1979) 



» 



- 289 



PART 5— LABOR STANDARDS PROVI- 
SIONS APPLICABLE TO CON- 
TRACTS COVERING FEDERALLY FI- 
NANCED AND ASSISTED CON- 
STRUCTION (ALSO LABOR STAND- 
ARDS PROVISIONS APPLICABLE TO 
NONCONSTRUCTION CONTRACTS 
SUBJECT TO THE CONTRACT 
WORK HOURS AND SAFETY 
STANDARDS ACT) 

Subpart A — General 

Sec. 

5.0 Suspension of certain provisions of this 
part and revocation of the suspension. 

5.1 Purpose and scope. 

5.2 Definitions. 
5.3-5.4 [Reserved] 

5.5 Contract provisions and related mat- 
ters. 

5.6 Enforcement. 

5.7 Reports to the Secretary of Labor. 

5.8 Review of recommendations for an ap- 
propriate adjustment in liquidated dam- 
ages under the Contract Work Hours 
and Safety Standards Act. 

5.9 Suspension of funds. 

5.10 Restitution, criminal action. 

5.11 Department of Labor investigations, 
hearings. 

5.12 Rulings and interpretations. 

5.13 Variations, tolerances, and exemptions 
from Parts 1 and 3 of this subtitle and 
this part. 

5.14 Limitations, variations, tolerances, 
and exemptions under the Contract 
Work Hours and Safety Standard" Act. 

5.15 Training plans approved or recognized 
by the Department of Labor prior to 
August 20, 1975. 

5.16 Withdrawal of approval of a training 
program. 

5.17 Appeal from Bureau of Apprentice- 
ship and Training's decisions. 

Subpart B — Interpretation of the Fringe 
Benefits Provisions of the Davis-Bacon Act 

5.20 Scope and significance of this subpart. 

5.21 [Reserved] 

5.22 Effect of the Davis-Bacon fringe bene- 
fits provisions. 

5.23 The statutory provisions. 

5.24 The basic hourly rate of pay. 



5.25 Rate of contribution or cost for fringe 
benefits. 

5.26 " * * * contribution irrevocably made 
• • * to a trustee or to a third person". 

5.27 " • • • fund, plan, or program". 

5.28 Unfunded plans. 

5.29 Specific fringe benefits. 

5.30 Types of wage determinations. 

5.31 Meeting wage determination obliga- 
tions. 

5.32 Overtime payments. 

Authority: Reorg. Plan No. 14 of 1950, 64 
Stat. 1267; sec. 2, 48 Stat. 948; sec. 10, 61 
Stat. 89; 5 U.S.C. 301, 133z-15 note, 29 
U.S.C. 258; 40 U.S.C. 276c. unless otherwise 
noted. 

Subpart A — General 

§ 5.0 Suspension of certain provisions of 
this part and revocation of the suspen- 
sion. 

(a) Effective February 23, 1971, and 
until otherwise provided, certain of 
the provisions of this part, as set forth 
in paragraph (c) of this section, were 
suspended pursuant to Proclamation 
4031 (36 FR 3457) promulgated by the 
President on February 23, 1971, under 
the authority provided in section 6 of 
the Davis-Bacon Act (40 U.S.C. 276a- 
5). 

(b) Proclamation 4031 suspended, as 
to all contracts entered into on or sub- 
sequent to February 23, 1971, and 
until otherwise provided— 

(1) The provisions of the Davis- 
Bacon Act of March 31, 1931, as 
amended, and the provisions of all 
other acts providing for the payment 
of wages, which provisions are depend- 
ent upon determinations by the Secre- 
tary of Labor under the Davis-Bacon 
Act; and 

(2) The provisions of any Executive 
order, proclamation, rule, regulation, 
or other directive providing for the 
payment of wages, which provisions 
are dependent upon determinations by 



290 



§5.0(b)(2) 



the Secretary of Labor under the 
Davis-Bacon Act. 

(c) Except with respect to contracts 
entered into prior to February 23, 
1971, the following provisions of this 
part were suspended, effective on such 
date and until otherwise provided, 
pursuant to Proclamation 4031 as set 
forth in paragraphs (a) and (b) of this 
section: 

(1) The provisions of §§5.3 and 5.4, 
in their entirety; 

(2) The provisions of paragraph (a) 
of § 5.5, insofar as they prescribe the 
inclusion in contracts of clauses set 
forth in paragraphs (c)(1) through (4) 
of such section or authorized modifica- 
tions thereof; 

(3) The provisions of paragraphs (c) 
(6) and (7) of § 5.5(a), insofar as they 
require the inclusion in contracts and 
subcontracts of references to the 
clauses prescribed by paragraphs (c) 
(1) through (4) of § 5.5(a); and 

(4) The provisions of §§ 5.6 and 5.7. 

(d) The suspension referred to in 
paragraphs (a) and (b) of this section 
did not apply to: 

(1) The provisions of § 5.5(c); or to 

(2) The application of any provisions 
of this part to contracts entered into 
prior to February 23, 1971. With re- 
spect to contracts entered into prior to 
such date all provisions of this part, as 
modified in accordance with the guide- 
lines, orders, and organizational de- 
scription published in the Federal 
Register of Friday, January 8, 1971 
(36 FR 304-308) remain in effect. 

(e) The suspension of the provisions 
of this part referred to in paragraphs 
(a) and (c) of this section is now re- 
voked pursuant to Proclamation No. 
4040 of the President dated March 29, 
1971, which revoked Proclamation No. 
4031 of February 23, 1971, as to all 
construction contracts, whether for 
direct Federal construction or federal- 
ly assisted construction, for which so- 



licitations for bids or proposals are 
issued after March 29, 1971, the date 
of Proclamation No. 4040. Attention is 
directed to the fact that this revoca- 
tion does not affect the validity of 
contracts entered into after February 
23, 1971, without Davis-Bacon rates 
pursuant to authority of Proclamation 
No. 4031, including contracts let after 
March 29, 1971, pursuant to solicita- 
tions for bids or proposals issued on or 
before March 29, 1971. 

(Proclamation No. 4040, 40 U.S.C. 276a 5) 
[36 FR 6427, Apr. 3, 1971] 

§ 5.1 Purpose and scope. 

(a) The regulations contained in this 
part are promulgated in order to co- 
ordinate the administration and en- 
forcement of the labor standards pro- 
visions of each of the following acts by 
the Federal agencies responsible for 
their administration and such addi-^ 
tional statutes as may from time toi 
time confer upon the Secretary of 
Labor additional duties and responsi- 
bilities similar to those conferred upon 
him under Reorganization Plan No. 14 
of 1950: 

1. The Davis-Bacon Act (sec. 1-7. 46 Stat. 
1494. as amended; Pub. L. 74-403. 40 U.S.C. 
276a-276a-7). 

2. Copeland Act ^40 U.S.C. 276c). 

3. The Contract Work Hours and Safety 
Standards Act (40 U.S.C. 327-330). 

4. National Housing Act tsec. 212 added to 
c. 847. 48 Stat. 1246. by sec. 14, 53 Stat. 807; 
12 U.S.C. 1715c and repeatedly amended). 

5. Housing Act of 1950 (college housing) 
(amended by Housing Act of 1959 to add 
labor provisions, 73 Stat. 681: 12 U.S.C. 
1749a(f)). 

6. Housing Act of 1959 (sec. 401(f) of the 
Housing Act of 1950 as amended by Pub. L. 
86-372, 73 Stat. 681; 12 U.S.C. 1701q(c)(3)>. 

7. Commercial Fisheries Research and De- 
velopment Act of 1964 (sec. 7. 78 Stat. 199: 
16 U.S.C. 779e(b)). 

8. Library Services and Construction Act 
(sec. 7(a). 78 Stat. 13; 20 U.S.C. 355c(aK4). as 



- 291 - 



§5.1(a) 



amended). 

9. National Technical Institute for the 
Deaf Act (sec. 5(b)(5). 79 Stat. 126; 20 U.S.C. 
684(b)(5)). 

10. National Foundation on the Arts and 
Humanities Act of 1965 (sec. 5(k). 79 Stat. 
846 as amended; 20 U.S.C. 954(j)). 

11. Elementary and Secondary Education 
Act of 1965 as amended by Elementary and 
Secondary and other Education Amend- 
ments of 1969 (sec. 423 as added by Pub. L. 
91-230. title IV. sec. 401(a)(10). 84 Stat. 169, 
and renumbered sec. 433. by Pub. L. 92-318; 
title III. sec. 301(a)(1), 86 Stat. 326; 20 
U.S.C. 1232(b)). Under the amendment cov- 
erage is entended to all programs adminis- 
tered by the Commissioner of Education. 

12. The Federal-Aid Highway Act of 1956 
(sec. 108(b). 70 Stat. 378. recodified at 72 
Stat. 895; 23 U.S.C. 113(a). as amended), see 
particularly the amendments in the Feder- 
al-Aid Highway Act of 1968 (Pub. L. 90-495. 
62 Stat. 815). 

13. Indian Self-Determination and Educa- 
^ tion Assistance Act (sec. 7. 88 Stat. 2205; 25 
m j U.S.C. 450e). 

14. Indian Health Care Improvement Act 
(sec. 303(b). 90 Stat. 1407; 25 U.S.C. 
1633(b)). 

15. Rehabilitation Act of 1973 (sec. 
306(b)(5). 87 Stat. 384. 29 U.S.C. 776(b)(5). 

16. Comprehensive Employment and 
Training Act of 1973 (sec. 606. 87 Stat. 880. 
renumbered sec. 706 by 88 Stat. 1845; 29 
U.S.C. 986; also sec. 604. 88 Stat. 1846; 29 
U.S.C. 964(b)(3)). 

17. State and Local Fiscal Assistance Act 
of 1972 (sec. 123(a)(6). 86 Stat. 933; 31 
U.S.C. 1246(a)(6)). 

18. Federal Water Pollution Control Act 
(sec. 513 of sec. 2. 86 Stat. 894-; 33 V.S.C. 
1372). 

19. Veterans Nursing Home Care Act of 
1964 (78 Stat. 502. as amended; 38 U.S.C. 
5035(a)(8)). 

20. Postal Reorganization Act (sec. 
410(b)(4)(C); 84 Stat. 726 as amended; 39 
U.S.C. 410(b)(4)(C)). 

21. National Visitors Center Facilities Act 
of 1968 (sec. 110. 32 Stat. 45; 40 U.S.C. 808). 

22. Appalachian Regional Development 
Act of 1965 (sec. 402. 79 Stat. 21; 40 U.S.C. 



App. 402). 

23. Health Services Research. Health Sta- 
tistics, and Medical Libraries Act of 1974 
(sec. 107. see sec. 308(h)(2) thereof. 88 Stat. 
370, as amended by 90 Stat. 378; 42 U.S.C. 
242m(h)(2)). 

24. Hospital Survey and Construction Act, 
as amended by the Hospital and Medical Fa- 
cilities Amendments of 1964 (sec. 605(a)(5), 
78 Stat. 453; 42 U.S.C. 291e(a)(5)). 

25. Health Professions Educational Assist- 
ance Act (sec. 303(b), 90 Stat. 2254; 42 U.S.C. 
293a(g)(l)(C); also sec. 308a. 90 Stat. 2256. 
42 U.S.C. 293a(c)(7)). 

26. Nurse Training Act of 1964 (sec 
941(a)(1)(C), 89 Stat. 364; 42 UJS.C. 
296a(b)(5)). 

27. Heart Disease, Cancer, and Stroke 
Amendments of 1965 (sec 904, as added by 
sec. 2, 79 Stat. 928; 42 U.S.C. 299d(b)(4)). 

28. Safe Drinking Water Act (sec. 2(a). see 
sec 1450e thereof, 88 Stat. 1691; 42 U.S.C. 
300j-9(e». 

29. National Health Planning and Re- 
sources Act (sec 4, see sec. 1604(b)(1)(H). 88 
Stat. 2261, 42 U.S.C. 300o-3(b)(lXH)) k 

30. U.S. Housing Act of 1937, as amended 
and recodified (88 Stat. 667; 42 U.S.C. 
1437j). 

31. Demonstration Cities and Metropoli- 
tan Development Act of 1966 (sees. 110, 311, 
503, 1003. 80 Stat. 1259. 1270, 1277, 1284; 42 
U.S.C. 3310; 12 U.S.C. 1715c 42 U.S.C. 
1437J). 

32. Slum clearance program; Housing Act 
of 1949 (sec. 109, 63 Stat. 419, as amended; 
42 U.S.C. 1459). 

33. Farm housing: Housing Act of 1964 
(adds sec. 516(f) to Housing Act of 1949 by 
sec. 503. 78 Stat. 797; 42 U.S.C. 1486(f)). 

34. Housing Act of 1961 (sec 707, added by 
sec. 907, 79 Stat. 496, as amended; 42 U.S.C. 
1500C-3). 

35. Defense Housing and Community Fa- 
cilities and Services Act of 1951 (sec 310, 65 
Stat. 307; 42U.&C. 15921). 

36. Special Health Revenue Sharing Act 
of 1975 (sec. 303. see sec 222(aX5) thereof. 
89 Stat. 324; 42 U.S.C. 2689j(aX5)). 

37. Economic Opportunity Act of 1964 
(sec. 607. 78 Stat. 532; 42 U.S.C. 2947). 

38. Headstart, Economic Opportunity, and 
Community Partnership ■ Act of 1974 (sec. 
11, see sec 811 thereof, 88 Stat. 2327; 42 
U.S.C. 2992a). 

39. Housing and Urban Development Act 



- 292 - 



§5.1(a) 



of 1965 (sec. 707, 79 Stat. 492 as amended; 42 
U.S.C. 3107). 

40. Older Americans Act of 1965 <£ec. 502. 
Pub. L. 89-73. as amended by sec 501, Pub. 
L. 93-29; 87 Stat. 50; 42 U.S.C. 3041a(a)(4». 

41. Public Works and Economic Develop- 
ment Act of 1965 (sec. 712; 79 Stat. 575 as 
amended; 42 U.S.C. 3222). 

42. Juvenile Delinquency Prevention Act 
(sec 1. 86 Stat. 536; 42 U.S.C. 3884). 

43. New Communities Act of 1968 (sec 
410. 82 Stat. 516; 42 U.S.C. 3909). 

44. Urban Growth and New Community 
Development Act of 1970 (sec 727(f), 84 
Stat. 1803; 42 U.S.C. 4529). 

45. Domestic Volunteer Service Act of 
1973 (sec. 406. 87 Stat. 410; 42 U.S.C. 5046). 

46. Housing and Community Development 
Act of 1974 (sees. 110. 802(g), 88 Stat. 649, 
724; 42 U.S.C. 5310. 1440(g)). 

47. Developmentaily Disabled Assistance 
and Bill of Rights Act (sec 126(4), 89 Stat. 
488; 42 U.S.C. 6042(4); title I, sec 111, 89 
Stat. 491; 42 U.S.C. 6063(bX19)). 

48. Public Works Employment Act of 1976 
(sec. 109. 90 Stat. 1001; 42 U.S.C. 6708; also 
sec 208. 90 Stat. 1008; 42 U.S.C. 6728). 

49. Energy Conservation and Production 
Act (sec 451(h), 90 Stat. 1168; 42 U.S.C. 
6881(h)). 

50. Solid Waste Disposal Act (sec 2, 90 
Stat. 2828;- 42 U.S.C. 6979). 

51. Rail Passenger Service Act of 1970 
(sec. 405d. 84 Stat. 1337; 45 U.S.C. 565(d)). 

52. Urban Mass Transportation Act of 

1964 (sec 10. 78 Stat. 307; renumbered sec 
13 by 88 Stat. 715; 49 U.S.C. 1609). 

53. Highway Speed Ground Transporta- 
tion Study (sec 6(b). 79 Stat. 893; 49 U.S.C. 
1636(b)). 

94. Airport and Airway Development Act 
of 1970 (sec 22(b). »4 Stat. 231; 49 U.S.C. 
1722(b)). 

55. Federal Civil Defense Act of 1950 (50 
U.S.C. App. 2281i). 

56. National Capital Transportation Act of 

1965 (sec 3(b)(4), 79 Stat. 644; 40 U.S.C. 
682(b)(4). Note.— Repealed December 9. 
1969, and labor standards incorporated in 
sec 1-1431 of the District of Columbia 
Code). 

57. Modet Secondary School for the Deaf 
Act (sec 4, 80 Stat. 1027. Pub. L. 89-694, but 
not in the United States Code). 

58. Delaware River Basin Com^ct (sec. 
15.1. 75 Stat. 714. Pub. L. 87-328) (consid- 
ered a statute for purposes of the plan but 



not in the United States Code). 

(b) Sections 1.5 and 1.7 of this subti- 
tle contain the Department's proce- 
dural rules governing requests for 
wage determinations under the Davis- 
Bacon Act and its related statutes 
listed in § 1.1 of this subtitle and the 
use of such wage determinations. 

[29 FR 99. Jan. 4. 1964, as amended at 30 
FR 13136. Oct. 15. 1965; 40 FR 30481. July 

21, 1975; 43 FR 32131, July 25, 1978] 

§ 5.2 Definitions. 

As used in this part: 

(a) The term "Agency Head" means 
the principal official of the Federal 
Agency and includes those persons 
duly authorized to act in his behalf; 

(b) The term "Contracting Officer" 
means the individual, his duly ap- 
pointed successor, or his authorized 
representative who is designated and 
authorized to enter into contracts on ^ 
behalf of the Federal agency, or other w 
administering agency; 

(c) The terms apprentice and trainee 
are defined as follows: 

(1) "Apprentice" means (i) a person 
employed and individually registered 
in a bona fide apprenticeship program 
registered with the U.S. Department 
of Labor, Employment and Training 
Administration, Bureau of Apprentice- 
ship and Training, or with a State Ap- 
prenticeship Agency recognized by the 
Bureau, or (ii) a person in his first 90 
days of probationary employment as 
an apprentice in such an apprentice- 
ship program, who is not individually 
registered in the program, but who 
has been certified by the Bureau of 
Apprenticeship and Training or a 
State Apprenticeship Agency (where 
appropriate) to be eligible for proba- 
tionary employment as an apprentice: 

(2) "Trainee" means a person regis- 
tered and receiving on-the-job training 
in a construction occupation under a 



293 



§5.2(c)(2) 



program which has been approved in 
advance by the U.S. Department of 
Labor, Employment and Training ad- 
ministration, Bureau of Apprentice- 
ship and Training as meeting its 
standards for on-the-job training pro- 
grams and which has been so certified 
by that Bureau. 

(d) The term "wage determination" 
includes the original decision and any 
subsequent decisions modifying, super- 
seding, correcting, or otherwise chang- 
ing the provisions of the original deci- 
sion, issued prior to the award of the 
construction contract, except that 
under the National Housing Act 
changes in the decision shall be effec- 
tive if made at any time prior to the 
beginning of construction. The use of 
the wage determination shall be sub- 
ject to the provisions of § 1.7 of this 
title. 

(e) The term "contract" means any 
contract within the scope of the labor 
standards provisions of any of the acts 
listed in § 5.1 and which is entered into 
lor the actual construction, alteration 
and/or repair, including painting and 
decorating, of a public building or 
public work, or building or work fi- 
nanced in whole or in part from Feder- 
al funds or in accordance with guaran- 
tees of a Federal agency or financed 
from funds obtained by pledge of any 
contract of a Federal agency to make a 
loan, grant or annual contribution, 
except where a different meaning is 
expressly indicated; 

(f) The terms "building" or "work" 
generally include construction activity 
as distinguished from manufacturing, 
furnishing of materials, or servicing 
and maintenance work. The terms in- 
clude without limitation, buildings, 
structures, and improvements of all 
types, such as bridges, dams, plants, 
highways, parkways, streets, subways, 
tunnels, sewers, mains, power lines, 
pumping stations, railways, airports, 



terminals, docks, piers, wharves, ways, 
lighthouses, buoys, jetties, break- 
waters, levees, canals, dredging, shor- 
ing, rehabilitation and reactivation of 
plants, scaffolding, drilling, blasting, 
excavating, clearing, and landscaping. 
The manufacture or furnishing of ma- 
te r ials, articles, supplies or equipment 
(whether or not a Federal or State 
agency acquires title to such materials, 
articles, supplies, or equipment during 
the course of the manufacture or fur- 
nishing, or owns the materials from 
which they are manufactured or fur- 
nished) is not a "building" or "work" 
within the meaning of the regulations 
in this part unless conducted in con- 
nection with and at the site of such a 
building or work as is described in the 
foregoing sentence, or under the 
United States Housing Act of 1937 and 
the Housing Act of 1949 in the con- 
struction or development of the proj- 
ect. 

(g) The terms "construction", "pros- 
ecution", "completion", or "repair" 
mean all types of work done on a par- 
ticular building or work at the site 
thereof or under the United States 
Housing Act of 1937 and the Housing 
Act of 1949 in the construction or de- 
velopment of the project, including 
without limitation, altering, remodel- 
ing, painting and decorating, the 
transporting of materials and supplies 
to or from the building or work by the 
employees of the construction contrac- 
tor or constructio i subcontractor, and 
the manufacturing or furnishing of 
materials, articles, supplies or equip- 
ment on the site of the building or 
work, or under the United States* 
Housing Act of 1937 and the Housing 
Act of 1949 in the construction or de- 
velopment of the project, by persons 
employed by the contractor or subcon- 
tractor. A mere token beginning of the 
work shall not be deemed to be the 
"beginning of construction" as that 



294 



§5.2(g) 



term is used in the National Housing 
Act. 

(h) The term "public building" or 
"public work" includes building or 
work, the construction, prosecution, 
completion, or repair of which, as de- 
fined above, is carried on directly by 
authority of or with funds of a Feder- 
al agency to serve the interest of the 
general public regardless of whether 
title thereof is in a Federal agency. 
However, the term "initial construc- 
tion" in the Federal-Aid Highway Act 
of 1956 does not include repair or 
maintenance work. 

(i) Every person paid by a contractor 
or subcontractor in any manner for 
his labor in the construction, prosecu- 
tion, completion, or repair of a public 
building or public work, or building or 
work financed in whole or in part by 
loans, grants, or guarantees from the 
United States, is "employed" and re- 
ceiving "wages", regardless of any con- 
tractual relationship alleged to exist. 

(j) The term "Federal agency" 
means the United States, the District 
of Columbia, and all executive depart- 
ments, independent establishments, 
administrative agencies, and instru- 
mentalities of the United States and 
of the District of Columbia, including 
corporations, all or substantially all of 
the stock of which is beneficially 
owned by the United States, by the 
District of Columbia, or any of the 
foregoing departments, establish- 
ments, agencies, and instrumentalities. 

(k) The term "wages" (and its singu- 
lar form) has the meaning prescribed 
in section Kb) of the Davis-Bacon Act. 

[29 FR 99. Jan. 4, 1964. as amended at 29 
FR 13463. Sept. 30. 1964; 40 FR 30481. July 
21, 1975; 41 FR 10063. Mar. 9. 1976] 

§§5.3-5.4 [Reserved] 

§ 5.5 Contract provisions and related mat- 
ters. 



(a) The Agency Head shall cause or 
require to be inserted in full in any 
contract subject to the labor standards 
provisions of any of the acts listed in 
§5.1, except those subject only to the 
Contract Work Hours and Safety 
Standards Act, the following clauses 
or any modifications thereof to meet 
the particular needs of the agency if 
first approved by the Department of 
Labor: 

(1) Minimum wages, (i) All mechanics and 
laborers employed or working upon the site 
of the work, or under the United States 
Housing Act of 1937 or under the Housing 
Act of 1949 in the construction or develop- 
ment of the project, will be paid uncondi- 
tionally and not less often than once a 
week, and without subsequent deduction or 
rebate on any account (except such payroll 
deductions as are permitted by regulations 
issued by the Secretary of Labor under the 
Copeland Act (29 CFR Part 3)), the full 
amounts due at time of payment computed 
at wage rates not less than those contained £ 
in the wage determination decision of the t 
Secretary of Labor which is attached hereto 
and made a part hereof, regardless of any 
contractual relationship which may be al- 
leged to exist between the contractor and 
such laborers and mechanics; and the wage 
determination decision shall be posted by 
the contractor at the site of the work in a 
prominent place where it can be easily seen 
by the workers. For the purpose of this 
clause, contributions made or costs reason- 
ably anticipated under section 1(b)(2) of the 
Davis-Bacon Act on behalf of laborers or 
mechanics are considered wages paid to 
such laborers or mechanics, subject to the 
provisions of 29 CFR 5.5(a)(l)(iv). Also for 
the purpose of this clause, regular contribu- 
tions made or costs incurred for more than 
a weekly period under plans, funds, or pro- 
grams, but covering the particularly weekly 
period, are deemed to be constructively 
made or incurred during such weekly 
period. 

(ii) The contracting officer shall require 
that any class of laborers or mechanics, in- 
cluding apprentices and trainees, which is 
not listed in the wage determination and 
which is to be employed under the contract, 
shall be classified or reclassified conform- 



295 - 



§5.5(a)(l)(ii) 



ably to the wage determination and a report 
of the action taken shall be sent by the Fed- 
eral agency to the Secretary of Labor. In 
the event the interested parties cannot 
agree on the proper classifications or reclas- 
sification of a particular class of laborers 
and mechanics, incuding apprentices and 
trainees, to be used, the question accompa- 
nied by the recommendation of the con- 
tracting officer shall be referred to the Sec- 
retary for final determination. 

(iii) The contracting officer shall require, 
whenever the minimum wage rate pre- 
scribed in the contract for a class of laborers 
or mechanics includes a fringe benefit 
which is not expressed as an hourly wage 
rate and the contractor is obligated to pay a 
cash equivalent of such a fringe benefit, an 
hourly cash equivalent thereof to be estab- 
lished. In the event the interested parties 
cannot agree upon a cash equivalent of the 
fringe benefit, the question, accompanied by 
the recommendation of the contracting offi- 
cer, shall be referred to the Secretary of 
Labor for determinations. 

(iv) If the contractor does not make pay- 
ments to a trustee or other third person, he 
may consider as part of the wages of any la- 
borer or mechanic the amount of any costs 
reasonably anticipated in providing benefits 
under a plan or program of a type expressly 
listed in the wage determination decision of 
the Secretary of Labor which is a part of 
this contract: Provided, however, The Secre- 
tary of Labor has found, upon the written 
request of the contractor, that the applica- 
ble standards of the Davis-Bacon Act have 
been met. The Secretary of Labor may re- 
quire the contractor to set aside in a sepa- 
rate account assets for the meeting of obli- 
gations under the plan or program. 

(2) Withholding. The (write in name of 
Federal agency) may withhold or cause to 
be withheld from the contractor so much of 
the accrued payments or advances as may 
be considered necessary to pay laborers and 
mechanics, including apprentices and train- 
ees, employed by the contractor or any sub- 
contractor on the work the full amount of 
wages required by the contract. In the event 
of failure to pay any laborer or mechanic, 
including any apprentice or trainee, em- 
ployed or working on the site of the work or 
under the United States Housing Act of 
1937 or under the Housing Act of 1949 in 
the construction or development of the 



project, all or part of the wages required by 
the contract, the (Agency) may, after writ- 
ten notice to the contractor, sponsor, appli- 
cant, or owner, take such action as may be 
necessary to cause the suspension of any 
further payment, advance, or guarantee of 
funds until such violations have ceased. 

(3) Payrolls and basic records, (i) Payrolls 
and basic records relating thereto will be 
maintained during the course of the work 
and preserved for a period of three years 
thereafter for all laborers and mechanics 
working at the site of the work, or under 
the United States Housing Act of 1937, or 
under the Housing Act of 1949, in the con- 
struction or development of the project. 
Such records will contain the name and ad- 
dress of each such employee, his correct 
classification, rates of pay (including rates 
of contributions or costs anticipated of the 
types described in section 1(b)(2) of the 
Davis-Bacon Act), daily and weekly number 
of hours worked, deductions made and 
actual wages paid. Whenever the Secretary 
of Labor has found under 29 CFR 
5.5(a)(l)(iv) that the wages of any laborer or 
mechanic include the amount of any costs 
reasonably anticipated in providing benefits 
under a plan or program described in sec- 
tion 1(b)(2)(B) of the Davis-Bacon Act, the 
contractor shall maintain records which 
show that the commitment to provide such 
benefits is enforceable, that the plan or pro- 
gram is financially responsible, and that the 
plan or program has been communicated in 
writing to the laborers or mechanics affect- 
ed, and records which show the costs antici- 
pated or the actual cost incurred in provid- 
ing such benefits. 

(ii) The contractor will submit weekly a 
copy of all payrolls to the (write in name of 
appropriate Federal agency) if the agency is 
a party to the contract, but if the agency is 
not such a party the contractor will submit 
the payrolls to the applicant, sponsor, or 
owner, as the case may be, for transmission 
to the (write in name of agency). The copy 
shall be accompanied by a statement signed 
by the employer or his agent indicating that 
the payrolls are correct and complete, that 
the wage rates contained therein are not 
less than those determined by the Secretary 
of Labor and that the classifications set 
forth for each laborer or mechanic conform 
with the work he performed. A submission 
of a "Weekly Statement of Compliance" 



- 296 - 



§5.5(a)(3)(ii) 



* 



which is required under this contract and 
the Copeland regulations of the Secretary 
of Labor (29 CFR, Part 3) and the filing 
with the initial payroll or any subsequent 
payroll of a copy of any findings by the Sec- 
retary of Labor under 29 CFR 5.5(a)(l)(iv) 
shall satisfy, this requirement. The prime 
contractor shall be responsible for the sub- 
mission of copies of payrolls of all subcon- 
tractors. The contractor will make the rec- 
ords required under the labor standards 
clauses of the contract available for inspec- 
tion by authorized representatives of the 
(write the name of agency) and the Depart- 
ment of Labor, and will permit such repre- 
sentatives to interview employees during 
working hours on the job. Contractors em- 
ploying apprentices or trainees under ap- 
proved programs shall include a notation on 
the first weekly certified payrolls submitted 
to the contracting agencies that their em- 
ployment is pursuant to an approved pro- 
gram and shall identify the program. 

(4) Apprentices and trainees— (i) Appren- 
tices. Apprentices will be permitted to work 
at less than the predetermined rate for the 
work they performed when they are em- 
ployed and individually registered in a bona 
fide apprenticeship program registered with 
the U.S. Department of Labor, Employment 
and Training Administration, Bureau of Ap- 
prenticeship and Training, or with a State 
Apprenticeship Agency recognized by the 
Bureau, or if a person is employed in his 
first 90 days of probationary employment as 
an apprentice in such an apprenticeship 
program, who is not individually registered 
in the program, but who has been certified 
by the Bureau of Apprenticeship and Train- 
ing or a State Apprenticeship Agency 
(where appropriate) to be eligible for proba- 
tionary employment as an apprentice. The 
allowable ratio of apprentices to journey- 
men in any craft classification shall not be 
greater than the ratio permitted to the con- 
tractor as to his entire work force under the 
registered program. Any employee lijted on 
a payroll at an apprentice wage rate, who is 
not a trainee as defined in subdivision (ii) of 
this subparagraph or is not registered or 
otherwise employed as stated above, shall 
be paid the wage rate determined by the 
Secretary of Labor for the classification of 
work he actually performed. The contractor 
or subcontractor will be required to furnish 
to the contracting officer or a representa- 



tive of the Wage-Hour Division of the U.S. 
Department of Labor written evidence of 
the registration of his program and appren- 
tices as well as the appropriate ratios and 
wage rates (expressed in percentages of the 
journeyman hourly rates), for the area of 
construction prior to using any apprentices 
on the contract work. The wage rate paid 
apprentices shall be not less than the appro- 
priate percentage of the journeyman's rate 
contained in the applicable wage determina- 
tion. 

(ii) Trainees. Except as provided in 29 
CFR 5.15 trainees will not be permitted to 
work at less than the predetermined rate 
for the work performed unless they are em- 
ployed pursuant to an individually regis- 
tered in a program which has received prior 
approval, evidenced by formal certification 
by the U.S. Department of Labor, Employ- 
ment and Training Administration, Bureau 
of Apprenticeship and Training. The ratio 
of trainees to journeymen shall not be 
greater than permitted under the plan ap- 
proved by the Bureau of Apprenticeship P 
and Training. Every trainee must be paid at 
not less than the rate specified in the ap- 
proved program for his level of progress. 
Any employee listed on the payroll at a 
trainee rate who is not registered and par- 
ticipating in a training plan approved by the 
Bureau of Apprenticeship and Training 
shall be paid not less than the wage rate de- 
termined by the Secretary of Labor for the 
classification of work he actually per- 
formed. The contractor or subcontractor 
will be required to furnish the contracting 
officer or a representative of the Wage- 
Hour Division of the U.S. Department of 
Labor written evidence of the certification 
of his program, the registration of the train- 
ees, and the ratios and wage rates pre- 
scribed in that program. In the event the 
Eureau of Apprenticeship and Training 
withdraws approval of a training program, 
the contractor will no longer be permitted 
to utilize trainees at less than the applicable 
predetermined rate for the work performed 
until an acceptable program is approved. 

(iii) Equal employment opportunity. The 
utilization of apprentices, trainees and jour- 
neymen under this part shall be in conform- 
ity with the equal employment opportunity 
requirements of Executive Order 11246, as 
amended, and 29 CFR Part 30. f 



- 297 



§5.5(a)(5) 



(5) Compliance with Copeland Regula- 
tions (29 CFR Part 3). The contractor shall 
comply with the Copeland Regulations (29 
CFR Part 3) of the Secretary of Labor 
which are herein incorporated by reference. 

(6) Subcontracts. The contractor will 
insert in any subcontracts the clauses con- 
tained in 29 CFR 5.5(a)(1) through (5) and 
(7) and such other clauses as the (write in 
the name of Federal agency) may by appro- 
priate instructions require, and also a clause 
requiring the subcontractors to include 
these clauses in any lower tier subcontracts 
which they may enter into, together with a 
clause requiring this insertion in any fur- 
ther subcontracts that may in turn be made. 

(7) Contract termination; debarment A 
breach of clauses (1) through (6) may be 
grounds for termination of the contract, 
and for debarment as provided in 29 CFR 
5.6. 

(b)(1) In the construction of a dwell- 
ing or dwellings insured under 12 
U.S.C. 1715v, or 1715w, compliance 
with the requirements of paragraph 
(a) of this section may be waived by 
the Agency Head in cases or classes of 
cases where laborers or mechanics, not 
otherwise employed at any time on 
the project, voluntarily donate their 
services without full compensation for 
the purpose of lowering the cost of 
construction and the Agency Head de- 
termines that any amounts saved 
thereby are fully credited to the non- 
profit corporation, association, or 
other organization undertaking the 
construction. 

(2) In construction assisted by any 
loan or grant under 20 U.S.C. Ch. 21, 
the Agency Head may waive the appli- 
cation of 20 U.S.C. 753(a) in cases or 
classes of cases where laborers or me- 
chanics not otherwise employed at any 
time in the construction of the proj- 
ect, voluntarily donate their services 
for the purpose of lowering the costs 
of construction and the Agency Head 
determines that any amounts saved 
thereby are fully credited to the edu- 
cational institution undertaking the 
construction. 



(3) In construction assisted under 
Section 503 of the Housing Act of 
1964, the Agency Head may waive the 
application of the prevailing wage 
standards prescribed therein in cases 
or classes of cases where laborers or 
mechanics, not otherwise employed at 
any time on the project, voluntarily 
donate their services without compen- 
sation for the purpose of lowering the 
costs of construction and the Agency 
Head determines that any amounts 
thereby saved are fully credited to the 
person, corporation, association, orgs* 
nization, or other entity undertaking 
the project. 

(c) The Agency Head shall cause or 
require the following clauses set forth 
in paragraphs (c) (1), (2), (3) and (4) of 
this section to be included in full in 
any contract subject to the Contract 
Work Hours and Safety Standards 
Act. As used in this paragraph, the 
terms "laborers" and "mechanics" in- 
clude watchmen and guards. 

(1) Overtime requirements. No contractor 
or subcontractor contracting for any part of 
the contract work which may require or in- 
volve the employment of laborers or me- 
chanics shall require or permit any laborer 
or mechanic in any workweek in which he is 
employed on such work to work in excess of 
eight hours in any calendar day or in excess 
of forty hours in such workweek unless such 
laborer or mechanic receives compensation 
at a rate not less than one and one-half 
times his basic rate of pay for all hours 
worked in excess of eight hours in any cal- 
endar day or in excess of forty hours in 
such workweek, as the case may be. 

(2) Violation; liability for unpaid wages; 
liquidated damages. In the event of any vio- 
lation of the clause set forth in subpara- 
graph (1), the contractor and any subcon- 
tractor responsible therefor shall be liable 
to any affected employee for his unpaid 
wages. In addition, such contractor and sub- 
contractor shall be liable to the United 
States (in the case of work done under con- 
tract for the District of Columbia or a terri- 
tory, to such District or to such territory), 
lor liquidated damages. Such liquidated 



- 298 



§5.5(c)(2) 



damages shall be computed with respect to 
each individual laborer or mechanic em- 
ployed in violation of the clause set forth in 
subparagraph (1), in the sum of $10 for each 
calendar day on which such employee was 
required or permitted to work in excess of 
eight hours or in excess of the standard 
workweek of forty hours without payment 
oj* the overtime wages required by the 
clause set forth in subparagraph (1). 

(3) Withholding for unpaid wages and liq- 
uidated damages. The (write in the name of 
the Federal agency) may withhold or cause 
to be withheld, from any moneys payable on 
account of work performed by the contrac- 
tor or subcontractor, such sums as may ad- 
ministratively be determined to be neces- 
sary to satisfy any liabilities of such con- 
tractor or subcontractor for unpaid wages 
and liquidated damages as provided in the 
clause set forth in subparagraph (2). 

(4) Subcontracts. The contractor shall 
insert in any subcontracts the clauses set 
forth in subparagraphs (1), (2), and (3) of 
this paragraph and also a clause requiring 
the subcontractors to include these clauses 
in any lower tier subcontracts which they 
may enter into, together with a clause re- 
quiring this insertion in any further subcon- 
tracts that may in turn be made. 

(d) In any contract required to con- 
tain the withholding clause set forth 
in paragraph (a)(2) of this section, the 
Federal Agency may modify the clause 
in paragraph (c)(3) of this section so 
as to refer only to the withholding and 
determination of sums for liquidated 
damages. 

(e) In any contract subject only to 
the Contract Work Hours and Safety 
Standards Act and not to any of the 
other statutes cited in § 5.1, the 
Agency Head shall cause or require to 
be inserted a clause requiring the 
maintenance of records containing the 
information specified in § 516.2(a) of 
this title. Records containing such in- 
formation shall be preserved for a 
period of three years from the comple- 
tion of the contract. Further, the 
Agency Head shall cause or require t«j 
be inserted in any such contract a 



clause providing that the records to be 
maintained under this paragraph shall 
be available for inspection in the 
manner that inspection of records is 
available under the terms of para- 
graph (a)(3)(h) of this section. 

(f) In contracts subject to section 
803 of the National Housing Act, the 
Agency Head shall cause or require in- 
clusion of the following clause: Every 
laborer and mechanic employed by the 
contractor or any subcontractor en- 
gaged in the construction of the proj- 
ect, shall receive compensation at a 
rate of not less than one and one-half 
times his basic or regular rate of pay 
for all hours worked in any workweek 
in excess of eight hours in any work- 
day or forty hours in the workweek, as 
the case may be. 

[29 FR 100, Jan. 4, 1964, as amended at 29 
FR 13463, Sept. 30, 1964; 30 FR 13136, Oct. £ 
15, 1965; 36 FR 19304, Oct. 2, 1971; 40 FR 
30481, July 21, 1975; 41 FR 10063, Mar. 9, 
1976] 

§ 5.6 Enforcement. 

(a)(1) It shall be the responsibility of 
the Federal agency to ascertain 
whether the clauses required by § 5.5 
have been inserted in the contracts. 
Agencies which do not directly enter 
Jnto such contracts shall promulgate 
the necessary regulations or proce- 
dures to require that the contracts 
contain the provisions of § 5.5 or such 
modifications thereof which have been 
approved by the Department of Labor. 
No payment, advance, grant, loan or 
guarantee of funds shall be approved 
by the Federal agency after the begin- 
ning of construction unless there is on 
file with the agency a certification by 
the contractor that he and his subcon- 
tractors have complied or that there is 
a substantial dispute with respect to 
the required provisions. 

(2) The Federal agency shall make ^ 
such examination of the submitted ^ 



299 - 



§5.6(a)(2) 



payrolls and statements as may be 
necessary to assure compliance with 
the labor standards clauses required 
by the regulations contained in this 
part and the applicable statutes listed 
in § 5.1. In connection with such exam- 
ination particular attention should be 
given to the correctness of classifica- 
tions and disproprotionate employ- 
ment of laborers, helpers, apprentices 
or trainees. Such payrolls and state- 
ments shall be preserved by the 
agency for a period of 3 years from 
the date of completion of the contract 
and shall be produced at the request 
of the Secretary of Labor at any time 
during the 3-year period. 

(3) In addition to the examination of 
payrolls and statements required by 
paragraph (a)(2) of this section, the 
Federal agency shall cause the investi- 
gations to be made as may be neces- 
sary to assure compliance with the 
labor standards clauses required by 
the regulations contained in this part 
and the applicable statutes listed in 
§5.1. Projects where the contract is of 
short duration (6 months or less) shall 
be investigated before the work is ac- 
cepted, if feasible. In the case of con- 
tracts which extend over a long period 
of time the investigation shall be made 
with such frequency as may be neces- 
sary to assure compliance. Such inves- 
tigations shall include interviews with 
employees and examinations of pay- 
roll data and evidence of registration 
and certification with respect to ap- 
prenticeship and training plans to de- 
termine the correctness of classifica- 
tions and disproportionate employ- 
ment of laborers, helpers, apprentices 
or trainees. Complaints of alleged vio- 
lations shall be given priority. It is the 
policy of the Department of Labor to 
protect the identity of its confidential 
sources and to prevent an unwarrant- 
ed invasion of personal privacy. Ac- 



cordingly, the identity of an employee 
who makes a confidential written or 
oral statement as a complaint or in the 
course of an investigation, as well as 
protions of the statement which would 
reveal his identity, will not be dis- 
closed without the prior consent of 
the employee. Disclosure of employee 
statements shall be governed by the 
provisions of the 'Freedom of Infor- 
mation Act" (5 U.S.C. 552, see 29 CFR 
Part 70) and the 'Privacy Act of 1974" 
(5 U.S.C. 552a). 

(b)(1) Whenever any contractor or 
subcontractor is found by the Secre- 
tary of Labor or the Agency Head with 
the concurrence of the Secretary of 
Labor to be in aggravated or willful 
violation of the labor standards provi- 
sions of any of the applicable statutes 
listed in §5.1, other than the Davis- 
Bacon Act, such contractor or subcon- 
tractor or any firm, corporation, part- 
nership, or association in which such 
contractor or subcontractor has a sub- 
stantial interest shall be ineligible for 
a period not to exceed 3 years (from 
the date of publication by the Comp- 
troller General of the name or names 
of said contractor or subcontractor on 
the ineligible list as provided below) to 
receive any contracts subject to any of 
the statutes listed in §5.1. Provided, 
however, That the Administrator of 
the Wage and Hour Division shall 
direct the removal from the debarred 
bidders list of any contractor or sub- 
contractor whom he has found to have 
demonstrated a current responsibility 
to comply with the labor standards 
provisions applicable to Federal con- 
tracts and federally assisted construc- 
tion work subject to any of the appli- 
cable statutes listed in § 5.1. In cases 
arising under contracts covered by the 
Davis-Bacon Act, the ineligibility pro- 
vision prescribed in that act shall 
govern. 

(2) The Agency Head shall furnish 



300 - 



§5.6(b)(2) 



to the Secretary of Labor for transmit- 
tal to the Comptroller General the 
names of the persons or firms who 
have been found to have disregarded 
their obligations to employees. The 
Comptroller General will distribute a 
list to all Departments of the Govern- 
ment giving the names of such ineligi- 
ble persons or firms. 

(c)(1) Whenever as a result of an in- 
vestigation conducted by the Agency 
or the Department of Labor, the 
Deputy Administrator of the Wage 
and Hour Division, Department of 
Labor, finds reasonable cause to be- 
lieve that a contractor or subcontrac- 
tor has committed willful or aggravat- 
ed violations of the labor standards 
provisions of any of the statutes listed 
in §5.1 (other than the Davis-Bacon 
Act), or has committed violations of 
the Davis-Bacon Act which constitute 
a disregard of its obligations to em- 
ployees or subcontractors under sec- 
tion 3(a) thereof, he shall promptly 
notify by registered or certified mail 
the contractor or subcontractor and 
its responsible officers, if any (and any 
firms in which the contractor or sub- 
contractor are known to have a sub- 
stantial interest), of the finding and 
afford such contractor or subcontrac- 
tor and any other parties notified an 
opportunity to present such reasons or 
considerations as they have to offer 
relating to why debarment action 
should not be taken under paragraph 
(b) of this section or section 3(a) of 
the Davis-Bacon Act. The Deputy Ad- 
ministrator shall furnish to those noti- 
fied a summary of the investigative 
findings, and shall make available to 
them any information disclosed by the 
investigation which is not privileged or 
found confidential for good cause. If 
this opportunity is requested, an infor- 
mal proceeding shall be held before an 
administrative law judge, an Assistant 
Regional Director for Employment 



Standards, or any other departmental 
officer of appropriate ability. At the 
conclusion of the informal proceeding, 
the presiding officer shall issue his de- 
cision which shall be served by regis- 
tered or certified mail upon the inter- 
ested parties. 

(2) Within 30 days after service of 
the decision, any interested party may 
file objections to the decision with the 
Administrator, Wage and Hour Divi- 
sion, United States Department of 
Labor, Washington, D.C. 20210. Such 
objections shall be specific, and shall 
be accompanied by reasons or bases 
therefor. In his discretion, the Admin- 
istrator may permit oral argument. If 
no objections are filed, the decisions of 
the presiding officer shall be final, 
except in cases under section 3 of the 
Davis-Bacon Act as to any action to be 
taken by the Comptroller General 
under that section. m 

(3) The decision of the Administra- 
tor shall show a ruling upon each ob- 
jection presented, and shall include a 
statement of (i) the findings and con- 
clusions, as well as the reasons or 
bases therefor, upon all material 
issues of fact, law, or discretion pre- 
sented on the record, and (ii) an ap- 
propriate order or recommendation. 
The decision of the Administrator 
shall be final, except in cases accepted 
for review, upon petition, by the Wage 
Appeals Board and in cases under sec- 
tion 3 of the Davis-Bacon Act as to 
any action to be taken by the Comp- 
troller General under that section. 

(d) Any person or firm debarred 
under § 5.6(b) may in writing request 
removal from the debarment list. The 
procedure for removal shall be sub- 
stantially similar to the debarment 
procedure set forth in paragraph (c) of 
this section. That is, the person or 
firm shall have an opportunity to 
demonstrate in an informal proceeding 
a current responsibility to comply k 



301 



§5.6(d) 



with the labor standards provisions ap- 
plicable to Federal contracts and to 
federally assisted construction work 
and to file objections to the presiding 
officer's decision for consideration by 
the Administrator. 

(Sees. 104, 105, 76 Stat. 358, 359; 40 U.S.C. 
330,331) 

[29 FR 102, Jan. 4, 1964, as amended at 40 
FR 30481, July 21, 1975] 

§ 5.7 Reports to the Secretary of Labor. 

(a) Enforcement reports. (1) Where 
underpayments total less than $500 
and are nonwillful, and where restitu- 
tion has been effected and future com- 
pliance assured, the Federal agency 
need not submit its investigative find- 
ings and recommendations, except 
where the Department of Labor has 
expressly requested that the investiga- 
tion be made. In the latter case, the 
investigating agency shall submit a 
factual summary report including any 
data on the amount of restitution 
paid, the number of workers who re- 
ceived restitution, liquidated damages 
assessed, corrective measures taken 
(such as "letters of notice"), and any 
information that may be necessary to 
review any recommendations for an 
appropriate adjustment in liquidated 
damages under § 5.8. 

(2) Where underpayments total $500 
or more, or are willful, the Federal 
agency shall furnish to the Depart- 
ment of Labor, as soon as practicable, 
a detailed enforcement report. The 
report should be prepared in accord- 
ance with the "Investigation and En- 
forcement Manual" published by the 
Department of Labor with respect to 
"Labor Standards Provisions Applica- 
ble to Contracts Covering Federally- 
Financed and Assisted Construction". 
In cases involving underpayments 
under the Davis-Bacon Act, the report 
should meet the reporting require- 



ments contained in Comptroller Gen- 
eral's Letter B-3368, dated March 19, 
1957. 

(b) Semi-annual enforcement re- 
ports. To assist the Secretary in fulfill- 
ing his responsibilities under Reorga- 
nization Plan No. 14 of 1950, Federal 
agencies shall furnish to the Secretary 
by April 30 and October 31 of each cal- 
endar year semi-annual reports on 
compliance with and enforcement of 
the labor standards provisions of the 
Davis-Bacon Act and its related acts 
covering the periods of October 1 
through March 31 and April 1 through 
September 30, respectively. Such re- 
ports shall be prepared in the manner 
prescribed in circular memoranda of 
the Secretary. 

(c) Additional information. Upon re- 
quest, the Agency Head shall transmit 
to the Secretary of Labor such infor- 
mation available to the Agency with 
respect to contractors and subcontrac- 
tors, their contracts, and the nature of 
the contract work as the Secretary 
may find necessary for the perform- 
ance of his duties with respect to the 
labor standards provisions referred to 
in this part. 

(d) Contract termination. Where the 
contract is terminated by reason of 
violations of the labor standards a 
report shall be submitted to the Secre- 
tary of Labor and the Comptroller 
General giving the name and address 
of the contractor or subcontractor 
whose right to proceed has been termi- 
nated, the name and address of the 
contractor or subcontractor, if any, 
who is to complete the work, the 
amount and number of his contract, 
and the description of the work he is 
to perform. 



[29 FR 102, Jan. 4, 1964, as amended at 30 
FR 13136. Oct. 15, 1965; 42 FR 54803, Oct. 
11, 1977] 



- 302 - 



§5.8 



§ 5.8 Review of recommendations for an 
appropriate adjustment in liquidated 
damages under the Contract Work 
Hours and Safety Standards Act. 

(a) Findings and recommendations 
by the head of the Agency. Whenever 
the head of an agency finds that a 
sum of liquidated damages administra- 
tively determined to be due under sec- 
tion 104(a) of the Contract Work 
Hours and Safety Standards Act and 
to be in excess of $100.00, is incorrect 
or that the contractor or subcontrac- 
tor violated inadvertently the provi- 
sions of the Contract Work Hours and 
Safety Standards Act notwithstanding 
the exercise of due care upon the part 
of the contractor or subcontractor in- 
volved, he may make recommenda- 
tions to the Secretary that an appro- 
priate adjustment in liquidated dam- 
ages be made or that the contractor or 
subcontractor be relieved of liability 
for such liquidated damages. Such 
findings with respect to liquidated 
damages necessarily include findings 
with respect to any wage underpay- 
ments for which the liquidated dam- 
ages are determined. 

(b) The recommendations of the 
head of an agency submitted to the 
Department of Labor under paragraph 
(a) of this section shall be reviewed 
initially by the Deputy Administrator 
of the Wage and Hour Division. When- 
ever the Deputy Administrator con- 
curs in the findings and recommenda- 
tions of the head of the agency, he 
shall issue an order to that effect, 
which shall be the final action of the 
Department of Labor with respect to 
the issues involved. Whenever the 
Deputy Administrator makes findings 
differing from those of the head of 
the agency, his decision shall be trans- 
mitted forthwith to the Administrator 
of the Wage and Hour Division for 
review. The Administrator shall issue 
a decision and order. In its discretion, 



the Wage Appeals Board may review 
the decision and order of the Adminis- 
trator. 

(c) Whenever the head of an agency 
finds that a sum of liquidated damages 
administratively determined to be due 
under section 104(a) of the Contract 
Work Hours and Safety Standards Act 
and to be $100.00 or less is incorrect or 
that the contractor or subcontractor 
violated inadvertently the provisions 
of the Contract Work Hours and 
Safety Standards Act notwithstanding 
the exercise of due care upon the part 
of the contractor or subcontractor in- 
volved, he may make an appropriate 
adjustment in such liquidated dam- 
ages or relieve the contractor or sub- 
contractor of liability for such liqui- 
dated damages without submitting rec- 
ommendations to this effect to the 
Secretary. This delegation of authori- ^ 
ty is made under section 105 of the ^ 
Contract Work Hours and Safety 
Standards Act and has been found to 
be necessary and proper in the public 
interest to prevent undue hardship 
and to avoid serious impairment of the 
conduct of Government business. 

(5 U.S.C. 301, sees. 104, 105, 76 Stat. 358, 
359;40U.S.C. 330, 331) 

U9 FR 103. Jan. 4, 1964, as amended at 33 
FR 8448. June 7, 1968] 

§ 5.9 Suspension of funds. 

In the event of failure or refusal of 
the contractor or any subcontractor to 
comply with labor standards stipula- 
tions required by the regulations con- 
tained in this part and the applicable 
statutes listed in §5.1, the Federal 
agency shall take such action as may 
be necessary to cause the suspension 
of the payment, advance or guarantee 
of funds until such time as the viola- 
tions are discontinued or until suffi- 
cient funds are withheld to compen- 
sate employees for the wages to which 4 



- 303 - 



§5.9 



they are entitled and to cover any liq- 
uidated damages which may be due. 

[29 FR 103, Jan. 4, 1964] 

§ 5.10 Restitution, criminal action. 

(a) The Agency Head may, in appro- 
priate cases where violations of the 
labor standards clauses required by 
the regulations contained in this part 
and the applicable statutes listed in 
§5.1 resulting in underpayment of 
wages to employees are found to be 
nonwillful, request that restitution be 
made to such employees or on their 
behalf to plans, funds, or programs for 
any type of fringe benefit prescribed 
in the applicable wage determination. 

(b) In cases where the Agency Head 
finds substantial evidence that such 
violations are willful and in violation 
of a criminal statute, the Agency Head 
shall forward the matter to the Attor- 
ney General of the United States for 
prosecution if the facts warrant. In all 
such cases the Secretary of Labor 
shall be informed of the action taken. 

[29 FR 103, Jan. 4, 1964, as amended at 29 
FR 13464, Sept. 30, 1964] 



§ 5.11 Department of Labor investigations, 
hearings. 

(a) The Secretary of Labor shall 
cause to be made such investigations 
as he deems necessary, in order to 
obtain compliance with the labor 
standards provisions of the applicable 
statutes listed in § 5.1, or to affirm or 
reject the recommendations by the 
Head of an agency for an appropriate 
adjustment in liquidated damages as- 
sessed under the Contract Work Hours 
and Safety Standards Act. Federal 
agencies, contractors, subcontractors, 
sponsors, applicants or owners shall 
cooperate with any authorized repre- 
sentative of the Department of Labor 
in the inspection of records, in inter- 



views with workers, and in all other as- 
pects of the investigation. Any author- 
ized representative of the Department 
of Labor under this section is deemed 
a person designated to aid in the en- 
forcement of the overtime standards 
required by the Contract Work Hours 
and Safety Standards Act within the 
meaning of section 104(a) of that Act. 
A report of the investigation of such 
representative shall be transmitted to 
proper officers of the United States, 
any territory or possession, as the case 
may be, as required by the aforesaid 
section 104(a). 

(b) In the event of disputes concern- 
ing the payment of prevailing wage 
rates or proper classifications which 
involve significant sums of money, 
large groups of employees, or novel or 
unusual situations, the Secretary of 
Labor may, upon request by a Federal 
agency or on his own motion, direct a 
hearing to be held. For the purpose of 
the hearing the Chief Administrative 
Law Judge shall, in writing, designate 
an administrative law judge who shall, 
after notice to all interested parties, 
make such investigation and conduct 
such hearings as may be necessary and 
render a decision embodying his find- 
ings and conclusions and if wages are 
found to be due, the amounts thereof. 
The administrative law judge's deci- 
sion shall be sent to the interested 
parties and shall be final unless a peti- 
tion for review of the decision by the 
Administrator of the Wage and Hour 
Division is filed by any such parties in 
quadruplicate with the Chief Adminis- 
trative Law Judge, United States De- 
partment of Labor, Washington, D.C. 
20036, within 20 days after receipt 
thereof. The petition for review must 
set out separately and particularly 
each objection asserted. The petition 
for review and the record which shall 
include the administrative law judge's 
decision then shall be certified by the 



- 304 



15.11(b) 



administrative law judge to the Ad- 
ministrator. The petitioner may file a 
brief (original and four copies) in sup- 
port of his petition within the 20-day 
period and any interested party upon 
whom the administrative law judge's 
decision has been served may within 
10 days after the expiration of the 
time for filing the petition for review, 
file a brief in support of, or in opposi- 
tion to the administrative law judge's 
decision. The Administrator's decision 
shall be subject to such further review 
by the Wage Appeals Board, as it may 
provide in its discretion. 
[20 FR 103, Jan. 4, 1964, as amended at 40 
FR 30482, July 21, 1975] 

§ 5.12 Rulings and interpretations. 

All questions arising in any agency 
^•elating to the application and inter- 
pretation of the rules contained in this 
part and in Parts 1 and 3 of this subti- 
tle, and of the labor standards provi- 
sions of any of the statutes listed in 
§ 5.1 shall be referred to the Secretary 
for appropriate ruling or interpreta- 
tion. The rulings and interpretations 
shall be authoritative and those under 
the Davis-Bacon Act may be relied 
upon as provided for in section 10 of 
the Portal-to-Portal Act of 1947 (29 
U.S.C. 259). Requests for such rulings 
and interpretations should be ad- 
dressed to the Secretary of Labor, 
United States Department of Labor, 
Washington D.C. 20210. 
[29 FR 103, Jan. 4, 1964] 

§ 5.13 Variations, tolerances, and exemp- 
tions from Parts 1 and 3 of this subtitle 
and this part. 

The Secretary may make variations, 
tolerances, and exemptions from the 
requirements of this part and those of 
Parts 1 and 3 of this subtitle whenever 
he finds that such action is necessary 
and proper in the public interest or to 
prevent injustice and undue hardrhip. 



[29 FR 103, Jan. 4, 1964] 

§ 5.14 Limitations, variations, tolerances, 
and exemptions under the Contract 
Work Hours and Safety Standards Act. 

(a) General. Upon his own initiative 
or upon the request of any Federal 
agency, the Secretary of Labor may 
provide under section 105 of the Con- 
tract Work Hours and Safety Stand- 
ards Act reasonable limitations and 
allow variations, tolerances, and ex- 
emptions to and from any or all provi- 
sions of that Act whenever he finds 
such action to be necessary and proper 
in the public interest to prevent injus- 
tice, or undue hardship, or to avoid se- 
rious impairment of the conduct of 
Government business. Any request for 
such action by the Secretary shall be 
submitted in writing, and shall set 
forth the reasons for which the re- 4 
quest is made. 

(b) Exemptions. Pursuant to section 
105 of the Contract Work Hours and 
Safety Standards Act, the following 
classes of contracts are found exempt 
from all provisions of that Act in order 
to prevent injustice, undue hardship, 
or serious impairment of Government 
business: 

( 1 ) Agreements entered into by or on 
behalf of the Commodity Credit Cor- 
poration providing for the storing in 
or handling by commercial warehouses 
of wheat, corn, oats, barley, rye, grain 
sorghums, soybeans, flaxseed, rice, 
naval stores, tobacco, peanuts, dry 
beans, seeds, cotton, and wool. 

(2) Sales of surplus power by the 
Tennessee Valley Authority to States, 
counties, municipalities, cooperative 
organization of citizens or farmers, 
corporations and other individuals 
pursuant to section 10 of the Tennes- 
see Valley Authority Act of 1933 (16 
U.S.C. 831i). M 



- 305 



§5.14(b)(3) 



(3) Contracts of $2,000.00 or less. 

(4) Purchases and contracts other 
than construction contracts in the ag- 
gregate amount of $2,500.00 or less. In 
arriving at the aggregate amount in- 
volved, there must be included all 
property and services which would 
properly be grouped together in a 
single transaction and which would be 
included in a single advertisement for 
bids if the procurement were being ef- 
fected by formal advertising. 

(5) Contract work performed in a 
workplace within a foreign country or 
within territory under the jurisdiction 
of the United States other than the 
following: A State of the United 
States; the District of Columbia; 
Puerto Rico; the Virgin Islands; Outer 
Continental Shelf lands defined in the 
Outer Continental Shelf Lands Act 
(ch. 345, 67 Stat. 462); American 
Samoa; Guam; Wake Island; Eniwetok 
Atoll; Kwajalein Atoll; Johnston 
Island; Canton Island; and the Canal 
Zone. 

(c) Tolerances. (1) The "basic rate of 
pay" under section 102 of the Contract 
Work Hours and Safety Standards Act 
may be computed as an hourly equiva- 
lent to the rate on which time-and- 
one-half overtime compensation may 
be computed and paid under section 7 
of the Pair Labor Standards Act of 
1938, as amended (29 U.S.C. 207), as 
interpreted in Part 778 of this title. 
This tolerance is found to be necessary 
and pioper in the public interest in 
order to prevent undue hardship. 

(2) Concerning the tolerance pro- 
vided in paragraph (c)(1) of this sec- 
tion, the provisions of section 7(d)(2) 
of the Fair Labor Standards Act and 
§778.7 of this title should be noted. 
Under these provisions, payments for 
occasional periods when no work is 
performed, due to vacations, and simi- 
lar causes are excludable from the 
"regular rate" under the Fair Labor 



Standards Act. Such payments, there- 
fore, are also excludable from the 
"basic rate" under the Contract Work 
Hours and Safety Standards Act. 

(3) See § 5.8(c) providing a tolerance 
subdelegating authority to the heads 
of agencies to make appropriate ad- 
justments in the assessment of liqui- 
dated damages totaling $100.00 or less 
under specified circumstances. 

(4)(i) Time spent in an organized 
program of related, supplemental in- 
struction by laborers or mechanics em- 
ployed under bona fide apprenticeship 
programs may be excluded from work- 
ing time if the criteria prescribed in 
paragraphs (c)(4)(ii) and (iii) of this 
section are met. 

(ii) The apprentice comes within the 
definition contained in § 5.2(c). 

(iii) The time in question does not 
involve productive work or perform- 
ance of the apprentice's regular duties. 

(d) Variations. (1) In order to pre- 
vent undue hardship, a workday con- 
sisting of a fixed and recurring 24- 
hour period commencing at the same 
time on each calendar day may be 
used in lieu of the calendar day in ap- 
plying the daily overtime provisions of 
the Act to the employment of fire- 
fighters or fireguards, under the fol- 
lowing conditions: (i) Where such em- 
ployment is under a platoon system re- 
quiring such employees to remain at 
or within the confines of their post of 
duty in excess of eight hours per day 
in a standby or on-call status; and (ii) 
if the use of such alternate 24-hour 
day has been agreed upon between the 
employer and such employees or their 
authorized representatives before per- 
formance of the work; and (iii) pro- 
vided that, in determining the daily 
and the weekly overtime requirements 
of the Act in any particular workweek 
of any such employee whose estab- 
lished workweek begins at an hour of 
the calendar day different from the 



306 



§5.14(d)(1) 



hour when such agreed 24-hour day 
commences, the hours worked in 
excess of 8 hours in any such 24-hour 
day shall be counted in the established 
workweek (of 168 hours commencing 
at the same time each week) in which 
such hours are actually worked. 

(2) In the event of failure or refusal 
of the contractor or any subcontractor 
to comply with overtime pay require- 
ments of the Contract Work Hours 
and Safety Standards Act, if the funds 
withheld by Federal agencies for the 
violations are not sufficient to pay 
fully both the unpaid wages due labor- 
ers and mechanics and the liquidated 
damages due the United States, the 
available funds shall be used first to 
compensate the laborers and mechan- 
ics for the wages to which they are en- 
titled (or an equitable portion thereof 
when the funds are not adequate for 
this purpose); and the balance, if any, 
shall be used for the payment of liqui- 
dated damages. 

(3) In the performance of any con- 
tract entered into pursuant to the pro- 
visions of 38 U.S.C. 620 to provide 
nursing home care of veterans, no con- 
tractor or subcontractor under such 
contract shall be deemed in violation 
of Section 102 of the Contract Work 
Hours and Safety Standards Act by 
virtue of failure to pay the overtime 
wages required by such section for 
work in excess of 8 hours in any calen- 
dar day or 40 hours in the workweek 
to any individual employed by an es- 
tablishment which is an institution 
primarily engaged in the care of the 
sick, the aged, or the mentally ill or 
defective who reside on the premises 
if, pursuant to an agreement or under- 
standing arrived at between the em- 
ployer and the employee before per- 
formance of the work, a work period 
of 14 consecutive days is accepted in 
lieu of the workweek of 7 consecutive 
days for the purpose of overtime com- 



pensation and if such individual re- 
ceives compensation for employment 
in excess of 8 hours in any workday 
and in excess of 80 hours in such 14- 
day period at a rate not less than lVfe 
times the regular rate at which the in- 
dividual is employed, computed in ac- 
cordance with the requirements of the 
Fair Labor Standards Act of 1938, as 
amended. 

(Sec. 105, 76 Stat. 359; 40 U.S.C. 331) 

[29 FR 104, Jan. 4, 1964, as amended at 29 
FR 13464, Sept. 30, 1964. 30 FR 7819, June 
17, 1965; 32 FR 1088, Jan. 31, 1967; 34 FR 
18753, Nov. 22, 1969; 36 FR 8949, May 15, 
1971; 38 FR 19970, July 26, 1973; 42 FR 
62132, Dec. 9, 1977] 

§ 5.15 Training plans approved or recog- 
nized by the Department of Labor 
prior to August 20, 1975. 

(a) Notwithstanding the provisions a 
of § 5.5(a)(4)(h) relating to the utiliza- ( ™ 
tion of trainees on Federal and feder- 
ally assisted construction, no contrac- 
tor shall be required to obtain approv- 
al of a training program which, prior 

to August 20, 1975, was approved by 
the Department of Labor for purposes 
of the Davis-Bacon and Related Acts, 
was established by agreement of orga- 
nized labor and management and 
therefore recognized by the Depart- 
ment, and/or was recognized by the 
Department under Executive Order 
11246, as amended. A copy of the pro- 
gram and evidence of its prior approv- 
al, if applicable, shall be submitted to 
the Bureau of Apprenticeship and 
Training, which shall certify such 
prior approval or recognition of the 
program. In every other respect, the 
provisions of § 5.5(a)(4)(H)— including 
those relating to registration of train- 
ees, permissible ratios, and wage rates 
to be paid— shall apply to these pro- 
grams. 

(b) Every trainee employed on a con- ^ 
tract executed on and after August 20, ( m 



307 



£}§5.15(b) 



1975, in one of the above training pro- 
grams must be individually registered 
in the program in accordance with 
BAT procedures, and must be paid at 
the rate specified in the program for 
his level of progress. Any such employ- 
ee listed on the payroll at a trainee 
rate who is not registered and partici- 
pating in a program certified by BAT 
pursuant to this section, or approved 
and certified by BAT pursuant to 
§5.5(a)(4)(ii), must be paid the wage 
rate determined by the Secretary of 
Labor for the classification of work he 
actually performed. The ratio of train- 
ees to journeymen shall not be greater 
than permitted by the terms of the 
program. 

(c) In the event a program which 
was recognized or approved prior to 
August 20, 1975, is modified, revised, 
extended, or renewed, the changes in 
the program or its renewal must be ap- 
proved by the Bureau of Apprentice- 
ship and Training before they may be 
placed into effect. 

[40 FR 30483, July 21, 1975] 

§ 5.16 Withdrawal of approval of a train- 
ing program. 

If at any time the Bureau of Ap- 
prenticeship and Training determines, 
after opportunity for a hearing, that 
the standards of any program, wheth- 
er it is one recognized or approved 
prior to August 20, 1975, or a program 
subsequently approved, have not been 
complied with, or that such a program 
fails to provide adequate training for 
participants, a contractor will no 
longer be permitted to utilize trainees 
at less than the predetermined rate 
for the classification of work actually 
performed until an acceptable pro- 
gram is approved. If the contractor 
brings an appeal pursuant to §5.17 
within 30 days of his receipt of a certi- 
fied letter withdrawing the Bureau of 
Apprenticeship and Training's approv- 



al, the effect of the withdrawal of ap- 
proval of the program will be delayed 
until a decision is rendered on the 
appeal. 

[40 FR 30483, July 21, 1975] 

§ 5.17 Appeal from Bureau of Apprentice- 
ship and Training's decisions. 

(a) Appeal from a withdrawal of ap- 
proval of a training program by the 
Bureau of Apprenticeship and Train- 
ing pursuant to § 5.16 may be made to 
the Assistant Secretary for Employ- 
ment and Training, U.S. Department 
of Labor, Washington, D.C. 20210. Ap- 
peals brought more than 30 days after 
the contractor's receipt of notice of 
withdrawal of approval of a program 
will be processed, but the effects of 
withdrawal of approval of the pro- 
gram will not be delayed during con- 
sideration of such an appeal. 

(b) Appeal from disapproval of new 
training programs whose approval is 
requested pursuant to these regula- 
tions may be made to the Assistant 
Secretary for Employment and Train- 
ing, U.S. Department of Labor, Wash- 
ington, D.C. 20210. 

(c) The Assistant Secretary for Em- 
ployment and Training (or his desig- 
nee) shall examine the complete 
record on the basis of which the denial 
was issued, including the application 
for the program, supporting data, 
Bureau of Apprenticeship and Train- 
ing decision, and any written argu- 
ment which the applicant may submit, 
and any reply thereto by the Bureau 
of Apprenticeship and Training. 
Copies of any such reply shall be 
served on the applicant. The Assistant 
Secretary, or his designee, shall ap- 
prove or disapprove the decision of the 
Bureau or shall advise what modifica- 
tions are necessary for approval of the 
program. This decision by the Assist- 
ant Secretary or his designee shall be 
final. 



- 308 



§5.17(c) 



[40 FR 30483, July 21, 1975, as amended at 
41 FR 10063, Mar. 9, 1976] 

Subpart B — Interpretation of the 
Fringe Benefits Provisions of the 
Davis-Bacon Act 

Source: 29 FR 13465, Sept. 30, 1964. 
unless otherwise noted. 

§ 5.20 Scope and significance of this sub- 
part. 

The 1964 amendments (Pub. L. 88- 
349) to the Davis-Bacon Act require, 
among other things, that the prevail- 
ing wage determined for Federal and 
federally-assisted construction include: 

(a) The basic hourly rate of pay; and 

(b) the amount contributed by the 
contractor or subcontractor for certain 
fringe benefits (or the cost to them of 
such benefits). The purpose of this 
subpart is to explain the provisions of 
these amendments. This subpart 
makes available in one place official 
interpretations of the fringe benefits 
provisions of the Davis-Bacon Act. 
These interpretations will guide the 
Department of Labor in carrying out 
its responsibilities under these provi- 
sions. These interpretations are in- 
tended also for the guidance of con- 
tractors, their associations, laborers 
and mechanics and their organiza- 
tions, and local, State and Federal 
agencies, who may be concerned with 
these provisions of the law. The inter- 
pretations contained in this subpart 
are authoritative and may be relied 
upon as provided for in section 10 of 
the Portal-to-Portal Act of 1947 (29 
U.S.C. 359). The omission to discuss a 
particular problem in this subpart or 
in interpretations supplementing it 
should not be taken to indicate the 
adoption of any position by the Secre- 
tary of Labor with respect *o such 
problem or to constitute an adminis- 
trative interpretation, practice, or en- 



forcement policy. Questions on mat- 
ters not fully covered by this subpart 
may be referred to the Secretary for 
interpretation as provided in § 5.12. 

§5.21 [Reserved] 

§5.22 Effect of the Davis-Bacon fringe 
benefits provisions. 

The Davis-Bacon Act and the pre- 
vailing wage provisions of the related 
statutes listed in § 1.1 of this subtitle 
confer upon the Secretary of Labor 
the authority to predetermine, as 
minimum wages, those wage rates 
found to be prevailing for correspond- 
ing classes of laborers and mechanics 
employed on projects of a character 
similar to the contract work in the 
area in which the work is to be per- 
formed. See paragraphs (a) and (b) of 
§ 1.2 of this subtitle. The fringe bene- 
fits amendments enlarge the scope of 
this authority by including certain /£ 
bona fide fringe benefits within the 
meaning of the terms "wages", "scale 
of wages", "wage rates", "minimum 
wages" and "prevailing wages", as used 
in the Davis-Bacon Act. 

§ 5.23 The statutory provisions. 

The fringe benefits provisions of the 
1964 amendments to the Davis-Bacon 
Act are, in part, as follows: 

(b) As used in this Act the term "wages", 
"scale of wages", "wage rates", "minimum 
wages", and "prevailing wages" shall in- 
clude— 

(1) The basic hourly rate of pay; and 

(2) The amount of— 

(A) The rate of contribution irrevocably 
made by a contractor or subcontractor to a 
trustee or to a third person pursuant to a 
fund, plan, or program; and 

(B) The rate of costs to the contractor or 
subcontractor which may be reasonably an- 
ticipated in providing benefits to laborers 
and mechanics pursuant to an enforceable 
commitment to carry out a financially re- 
sponsible plan or program which was com- 
municated in writing to the laborers and 
mechanics affected, / A 



- 309 



§5.23 



for medical or hospital care, pensions on re- 
tirement or death, compensation for inju- 
ries or illness resulting from occupational 
activity, or insurance to provide any of the 
foregoing, for unemployment benefits, life 
insurance, disability and sickness insurance, 
or accident insurance, for vacation and holi- 
day pay, for defraying costs of apprentice- 
ship or other similar programs, or for other 
bona fide fringe benefits, but only where 
the contractor or subcontractor is not re- 
quired by other Federal, State, or local law 
to provide any of such benefits * • *. 

§ 5.24 The basic hourly rate of pay. 

"The basic hourly rate of pay" is 
that part of a laborer's or mechanic's 
wages which the Secretary of Labor 
would have found and included in 
wage determinations prior to the 1964 
amendments. The Secretary of Labor 
is required to continue to make a sepa- 
rate finding of this portion of the 
wage. In general, this portion of the 
wage is the cash payment made direct- 
ly to the laborer or mechanic. It does 
not include fringe benefits. 

§ 5.25 Rate of contribution or cost for 
fringe benefits. 

(a) Under the amendments, the Sec- 
retary is obligated to make a separate 
finding of the rate of contribution or 
cost of fringe benefits. Only the 
amount of contributions or costs for 
fringe benefits which meet the re- 
quirements of the act will be consid- 
ered by the Secretary. These require- 
ments are discussed in this subpart. 

(b) The rate of contribution or cost 
is ordinarily an hourly rate, and will 
be reflected in the wage determination 
as such. In some cases, however, the 
contribution or cost for certain fringe 
benefits may be expressed in a formu- 
la or method of payment other than 
an hourly rate. In such cases, the Sec- 
retary may in his discretion express in 
the wage determination the rate of 
contribution or cost used in the formu- 



la or method or may convert it to an 
hourly rate of pay whenever he finds 
that such action would facilitate the 
administration of the Act. See 
§5.5(a)(l)(i)and(iii). 

§ 5.26 "* * * contribution irrevocably 
made * * * to a trustee or to a third 
person". 

Under the fringe benefits provisions 
(Section 1(b)(2) of the Act) the 
amount of contributions for fringe 
benefits must be made to a trustee or 
to a third person irrevocably. The 
"third person" must be one who is not 
affiliated with the contractor or sub- 
contractor. The trustee must assume 
the usual fiduciary responsibilities im- 
posed upon trustees by applicable law. 
The trust or fund must be set up in 
such a way that in no event will the 
contractor or subcontractor be able to 
recapture any of the contributions 
paid in or any way divert the funds to 
his own use or benefit. Although con- 
tributions made to a trustee or third 
person pursuant to a benefit plan 
must be irrevocably made, this does 
not prevent return to the contractor 
or subcontractor of sums which he 
had paid in excess of the contributions 
actually called for by the plan, as 
where such excess payments result 
from error or from the necessity of 
making payments to cover the estimat- 
ed cost of contributions at a time 
when the exact amount of the neces- 
sary contributions under the plan is 
not yet ascertained. For example, a 
benefit plan may provide for definite 
insurance benefits for employees in 
the event of the happening of a speci- 
fied contingency such as death, sick- 
ness, accident, etc., and may provide 
that the cost of such definite benefits, 
either in full or any balance in excess 
of specified employee contributions, 
will be borne by the contractor or sub- 
contractor. In such a case the return 



310 



§5.26 



by the insurance company to the con- 
tractor or subcontractor of sums paid 
by him in excess of the amount re- 
quired to provide the benefits which, 
under the plan, are to be provided 
through contributions by the contrac- 
tor or subcontractor, will not be 
deemed a recapture or diversion by 
the employer of contributions made 
pursuant to the plan. (See Report of 
the Senate Committee on Labor and 
Public Welfare, S. Rep. No. 963, 88th 
Cong., 2d Sess., p. 5.) 

§ 5.27 "* * * fund, plan, or program". 

The contributions for fringe benefits 
must be made pursuant to a fund, plan 
or program (sec. 1(b)(2)(A) of the act). 
The phrase "fund, plan, or program" 
is merely intended to recognize the 
various types of arrangements com- 
monly used to provide fringe benefits 
through employer contributions. The 
phrase is identical with language con- 
tained in section 3(1) of the Welfare 
and Pension Plans Disclosure Act. In 
interpreting this phrase, the Secretary 
will be guided by the experience of the 
Department in administering the 
latter statute. (See Report of Senate 
Committee on Labor and Public Wel- 
fare, S. Rep. No. 963, 88th Cong., 2d 
Sess., p. 5.) 

§ o.28 Unfunded plans. 

(a) The costs to a contractor or sub- 
contractor which may be reasonably 
anticipated in providing benefits of 
the types described in the act pursu- 
ant to an enforceable commitment to 
carry out a financially responsible 
plan or program, are considered fringe 
benefits within the meaning of the act 
(see 1(b)(2)(B) of the act). The legisla- 
tive history suggests that Lhese provi- 
sions were intended to permit the con- 
sideration of fringe benefits meeting, 
among others, these requirements and 
which are provided from the general 



assets of a contractor or subcontrac- 
tor. (Report of the House Committee 
on Education and Labor, H. Rep. No. 
308, 88th Cong., 1st Sess., p. 4.) 

(b) No type of fringe benefit is eligi- 
ble for consideration as a so-called un- 
funded plan unless: 

(1) It could be reasonably anticipat- 
ed to provide benefits described in the 
act; 

(2) It represents a commitment that 
can be legally enforced; 

(3) It is carried out under a finan- 
cially responsible plan or pre gram; 
and 

(4) The plan or program providing 
the benefits has been communicated 
in writing to the laborers and mechan- 
ics affected. (See S. Rep. No. 963, p. 6.) 

(c) It is in this manner that the act 
provides for the consideration of un- 
funded plans or programs in finding 
prevailing wages and in ascertaining f& 
compliance with the Act. At the same 
time, however, there is protection 
against the use of this provision as a 
means of avoiding the act's require- 
ments. The words "reasonably antici- 
pated" are intended to require that 
any unfunded plan or program be able 

to withstand a test which can perhaps 
be best described as one of actuarial 
soundness. Moreover, as in the case of 
other fringe benefits payable under 
the act, an unfunded plan or program 
must be "bona fide" and not a mere 
simulation or sham for avoiding com- 
pliance with the act. (See S. Rep. No. 
963, p. 6.) The legislative history sug- 
gests that in order to insure against 
the possibility that these provisions 
might be used to avoid compliance 
with the act, the committee contem- 
plates that the Secretary of Labor in 
carrying out his responsibilities under 
Reorganization Plan No. 14 of 1950, 
may direct a contractor or subcontrac- 
tor to set aside in an account assets 
which, under sound actuarial princi- , 4 



311 



• 



5.28(c) 



pies, will be sufficient to meet the 
future obligation under the plan. The 
preservation of this account for the 
purpose intended would, of course, 
also be essential. (S. Rep. No. 963, p. 
6.) This is implemented by the con- 
tractual provisions required by 
§5.5(a)(l)(iv). 

§ 5.29 Specific fringe benefits. 

(a) The act lists all types of fringe 
benefits which the Congress consid- 
ered to be common in the construction 
industry as a whole. These include the 
following: medical or hospital care, 
pensions on retirement or death, com- 
pensation for injuries or illness result- 
ing from occupational activity, or in- 
surance to provide any of the forego- 
ing, unemployment benefits, life insur- 
ance, disability and sickness insurance, 

•or accident insurance, vacation and 
holiday pay, defrayment of costs of 
apprenticeship or other similar pro- 
grams, or other bona fide fringe bene- 
fits, but only where the contractor or 
subcontractor is not required by other 
Federal, State, or local law to provide 
any of such benefits. 

(b) The legislative history indicates 
that it was not the intent of the Con- 
gress to impose specific standards re- 
lating to administration of fringe 
benefits. It was assumed that the ma- 
jority of fringe benefits arrangements 
of this nature will be those which are 
administered in accordance with re- 
quirements of section 302(c)(5) of the 
National Labor Relations Act, as 
amended (S. Rep. No. 963, p. 5). 

(c) The term "other bona fide fringe 
benefits" is the so-called "open end" 
provision. This was included so that 
new fringe benefits may be recognized 
by the Secretary as they become pre- 
vailing. It was pointed out that a par- 
ticular fringe benefit need not be rec- 
ognized beyond a particular area in 

g^order for the Secretary to find that it 



is prevailing in that area. (S. Rep. No. 
963, p. 6). 

(d) The legislative reports indicate 
that, to insure against considering and 
giving credit to any and all fringe 
benefits, some of which might be illu- 
sory or not genuine, the qualification 
was included that such fringe benefits 
must be "bona fide" (H. Rep. No. 308, 
p. 4; S. Rep. No. 963, p. 6). No difficul- 
ty is anticipated in determining 
whether a particular fringe benefit is 
"bona fide" in the ordinary case where 
the benefits are those common in the 
construction industry and which are 
establsihed under a usual fund, plan, 
or program. This would be typically 
the case of those fringe benefits listed 
in paragraph (a) of this section which 
are funded under a trust or insurance 
program. Contractors may take credit 
for contributions made under such 
conventional plans without requesting 
the approval of the Secretary of Labor 
under §5.5(a)(l)(iv). 

(e) Where the plan is not of the con- 
ventional type described in the preced- 
ing paragraph, it will be necessary for 
the Secretary to examine the facts 
and circumstances to determine 
whether they are "bona fide" in ac- 
cordance with requirements of the act. 
This is particularly true with respect 
to unfunded plans. Contractors or sub- 
contractors seeking credit under the 
act for costs incurred for such plans 
must request specific permission from 
the Secretary under § 5.5(a)(l)(iv). 

(f) The act excludes fringe benefits 
which a contractor or subcontractor is 
obligated to provide under other Fed- 
eral, State, or local law. No credit may 
be taken under the act for the pay- 
ments made for such benefits. For ex- 
ample, payment for workmen's com- 
pensation insurance under either a 
compulsory or elective State statute 
are not considered payments for fringe 
benefits under the Act. While each sit- 



- 312 



§ 5.29(f) 



uation must be separately considered 
on its own merits, payments made for 
travel, subsistence or to industry pro- 
motion funds are not normally pay- 
ments for fringe benefits under the 
Act. The omission in the Act of any 
express reference to these payments, 
which are common in the construction 
industry, suggests that these pay- 
ments should not normally be regard- 
ed as bona fide fringe benefits under 
the Act. 

§ 5.30 Types of wage determinations. 

(a) When fringe benefits are prevail- 
ing for various classes of laborers and 
mechanics in the area of proposed con- 
struction, such benefits are includable 
in any Davis-Bacon wage determina- 



tion. Illustrations, contained in para- 
graph (c) of this section, demonstrate 
some of the different types of wage de- 
terminations which may be made in 
such cases. 

(b) Wage determinations of the Sec- 
retary of Labor under the act do not 
include fringe benefits for various 
classes of laborers and mechanics 
whenever such benefits do not prevail 
in the area of proposed construction. 
When this occurs the wage determina- 
tion will contain only the basic hourly 
rates of pay, that is only the cash 
wages which are prevailing for the var- 
ious classes of laborers and mechanics. 
An illustration of this situation is con- 
tained in paragraph (c) of this section. 

(c) Illustrations: 



Classes 



Basic 

hourly 

rates 



Fringe benefits payments 



Health and 
welfare 



Pensions Vacations 



Appren- 
ticeship 
program 



Others 



# 



laborers $3.25 

Carpenters 4.00 

Painters 3.90 

E'ectricians 4.85 

Plumbers 4.95 

Ironworkers 4.60 



$0.15 
.15 
.10 
.15 



$0.10 
.15 
.20 



$0.20 



$0.05 



10 



(It should be noted this format is not necessarily in the exact foim in which determinations will issue; 
it is for illustration only.) 



§ 5.31 Meeting wage determination obliga- 
tions. 

(a) A contractor or subcontractor 
performing work subject to a Davis- 
Bacon wage determination may dis- 
charge his minimum wage obligations 
for the payment of both straight time 
wages and fringe benefits by paying in 
cash, making payments or incurring 
costs for "bona fide" fringe benefits of 
the types listed in the applicable wage 
determination or otherwise found pre- 
vailing by the Secretary of Labor, or 



by a combination thereof. 

(b) A contractor or subcontractor 
may discharge his obligations for the 
payment of the basic hourly rates and 
the fringe benefits where both are 
contained in a wage determination ap- 
plicable to his laborers or mechanics 
in the following ways: 

(1) By paying not less than the basic 
hourly rate to the laborers or mechan- 
ics and by making the contributions 
for the fringe benefits in the wage de- 
terminations, as specified therein. For. 
example, in the illustration container ^ 



- 313 



15.31(b)(1) 







in paragraph (c) of §5.30, the obliga- 
tions for "painters" will be met by the 
payment of a straight time hourly rate 
of not less than $3.90 and by contrib- 
uting not less than at the rate of 15 
cents an hour for health and welfare 
benefits, 10 cents an hour for pen- 
sions, and 20 cents an hour for vaca- 
tions; or 

(2) By paying not less than the basic 
hourly rate to the laborers or mechan- 
ics and by making contributions for 
"bona fide" fringe benefits in a total 
amount not less than the total of the 
fringe benefits required by the wage 
determination. For example, the obli- 
gations for "painters" in the illustra- 
tion in paragraph (c) of §5.30 will be 
met by the payment of a straight time 
hourly rate of not less than $3.90 and 
by contributions of not less than a 

tal of 45 cents an hour for "bona 
ide" fringe benefits; or 

(3) By paying in cash directly to la- 
borers or mechanics for the basic 
hourly rate and by making an addi- 
tional cash payment in lieu of the re- 
quired benefits. For example, where 
an employer does not make payments 
or incur costs for fringe benefits, he 
would meet his obligations for "paint- 
ers" in the illustration in paragraph 
(c) of § 5.30, by paying directly to the 
painters a straight time hourly rate of 
not less than $4.35 ($3.90 basic hourly 
rate plus 45 cents for fringe benefits); 
or 

(4) As stated in paragraph (a) of this 
section, the contractor or subcontrac- 
tor may discharge his minimum wage 
obligations for the payment of 
straight time wages and fringe bene- 
fits by a combination of the methods 
illustrated in paragraphs (b)(1) thru 
(3) of this section. Thus, for example, 
his obligations for "painters" may be 
met by an hourly rate, partly in cash 
and partly in payments or costs for 
fringe benefits which total not less 



than $4.35 ($3.90 basic hourly rate 
plus 45 cents for fringe benefits). The 
payments in such case may be $4.10 in 
cash and 25 cents in payments or costs 
\v fringe benefits. Or, they may be 
$3.75 in cash and 60 cents in payments 
or costs for fringe benefits. 
[30 FR 13136, Oct. 15, 19653 

§ 5.32 Overtime payments. 

(a) The act excludes amounts paid 
by a contractor or subcontractor for 
fringe benefits in the computation of 
overtime under the Fair Labor Stand- 
ards Act, the Contract Work Hours 
and Safety Standards Act, and the 
Walsh-Healey Public Contracts Act 
whenever the overtime provisions of 
any of these statutes apply concur- 
rently with the Davis-Bacon Act or its 
related prevailing wage statutes. It is 
clear from the legislative history that 
in no event can the regular or basic 
rate upon which premium pay for 
overtime is calculated under the afore- 
mentioned Federal statutes be less 
than the amount determined by the 
Secretary of Labor as the basic hourly 
rate (i.e. cash rate) under section 
1(b)(1) of the Davis-Bacon Act. (See S. 
Rep. No. 963, p. 7.) Contributions by 
employees are not excluded from the 
regular or basic rate upon which over- 
time is computed under these statutes; 
that is, an employee's regular or basic 
straight-time rate is computed on his 
earnings before any deductions are 
made for the employee's contributions 
to fringe benefits. The contractor's 
contributions or costs for fringe bene- 
fits may be excluded in computing 
such rate so long as the exclusions do 
not reduce the regular or basic rate 
below the basic hourly rate contained 
in the wage determination. 

(b) The legislative report notes that 
the phrase "contributions irrevocably 
made by a contractor or subcontractor 
to a trustee or to a third person pursu- 



- 314 



§ 5.32(b) 



ant to a fund, plan, or program" was 
added to the bill in Committee. This 
language in essence conforms to the 
overtime provisions of section 7(d)(4) 
of the Fair Labor Standards Act, as 
amended. The intent of the committee 
was to prevent any avoidance of over- 
time requirements under existing law. 
See H. Rep. No. 308, p. 5. 

(c)(1) The act permits a contractor 
or subcontractor to pay a cash equiva- 
lent of any fringe benefits found pre- 
vailing by the Secretary of Labor. 
Such a cash equivalent would also be 
excludable in computing the regular 
or basic rate under the Federal over- 
time laws mentioned in paragraph (a). 
For example, the W construction con- 
tractor pays his laborers or mechanics 
$3.50 in cash under a wage determina- 
tion of the Secretary of Labor which 
requires a basic hourly rate of $3 and 
a fringe benefit contribution of 50 
cents. The contractor pays the 50 
cents in cash because he made no pay- 
ments and incurred no costs for fringe 
benefits. Overtime compensation in 
this case would be computed on a reg- 
ular or basic rate of $3.00 an hour. 
However, in some cases a question of 
fact may be presented in ascertaining 
whether or not a cash payment made 
to laborers or mechanics is actually in 
lieu of a fringe benefit or is simply 



part of their straight time cash wage. 
In the latter situation, the cash pay- 
ment is not excludable in computing 
overtime compensation. Consider the 
examples set forth in paragraphs (c) 
(2) and (3) of this section. 

(2) The X construction contractor 
has for some time been paying $3.25 
an hour to a mechanic as his basic 
cash wage plus 50 cents an hour as a 
contribution to a welfare and pension 
plan. The Secretary of Labor deter- 
mines that a basic hourly rate of $3 an 
hour and a fringe benefit contribution 
of 50 cents are prevailing. The basic 
hourly rate or regular rate for over- 
time purposes would be $3.25, the rate 
actually paid as a basic cash wage for 
the employee of X, rather than the $3 
rate determined as prevailing by the 
Secretary of Labor. 

(3) Under the same prevailing wage 
determination, discussed in paragraph^ 
(c)(2) of this section, the Y construc- 
tion contractor who has been paying 
$3 an hour as his basic cash wage on 
which he has been computing over- 
Lime compensation reduces the cash 
wage to $2.75 an hour but computes 
his costs of benefits under section 
1(b)(2)(B) as $1 an hour. In this exam- 
ple the regular or basic hourly rate 
would continue to be $3 an hour. See 
S. Rep. No. 963, p. 7. 



', U.S. Government Printing Office: 1979—620-014/4451 



♦ 



- 315